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Asset Turnover

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in dollars by assets in dollars.


Asset turnover measures the firm's efficiency at using its assets in generating sales or revenue; the higher the number the better. It also indicates pricing strategy: companies with low profit margins tend to have high asset turnover; those with high profit margins have low asset turnover.

Receivables Turnover

An accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. Receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.

Formula:


Some companies' reports will only show sales - this can affect the ratio depending on the size of cash sales

By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. A high ratio implies either that a company operates on a cash basis or that......

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Approximate Word Count: 1396
Approximate Pages: 6 (250 words per double-spaced page)

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