Finance

The average collection period (ACP) of a company refers to the average number of days it takes to convert receivables into cash. It's also known as days sales outstanding.In other words, it's the average number of days company’s customers/clients takes to pay their bills or number of days taken by the company to collect invoiced amount from customers.Average collection … [Read more...] about How to calculate average collection period Ratio – ACP

Inventory turnover ratio shows how often the company replaces its inventory or how well the company generates revenue out of its stock of goods. This ratio is most importantly used as a performance indicator in retail and manufacturing businesses.Inventory/stock of goods of a company includes followings:In retail business most of the inventories are finished goods … [Read more...] about How to calculate inventory turnover ratio – ITR

In our last article we have discussed how to calculate fixed assets turnover ratio. In this article, we wants to measure how well the company has generated sales from its total assets during a particular period. As this ratio is a comparison of company's total assets to the total revenue/sales, its known as total assets turnover ratio.Total assets turnover ratio tells us … [Read more...] about How to calculate total assets turnover ratio -TAT

Fixed assets turnover ratio determines how efficiently a company is using it’s fixed assets to generate sales. Its also known as efficiency ratio. Before getting into the calculation part, let us first understand why fixed assets turnover ratio is required.Business owners invest their hard earned money in to the company to get a piece of company’s earnings. Company profit … [Read more...] about How to calculate Fixed assets turnover ratio – FAT

To find out how efficient the company is at paying to its creditors, suppliers or short term obligations, accounts payable turnover ratio is calculated.Accounts payable is a short term liability shown in the current liability section on the balance sheet. It shows how much a company owes to its suppliers and creditors as at the balance sheet date. It's also known as average … [Read more...] about How to calculate accounts payable turnover ratio