Efficiency Ratios Formula Step By Step Calculations
What is the Efficiency Ratio? Efficiency ratios measure how effectively a company manages its assets and liabilities and include formulas like asset turnover, inventory turnover, receivables turnover, and accounts payable turnover. The Asset turnover ratioAsset Turnover RatioThe asset turnover ratio is the ratio of a company’s net sales to total average assets, and it helps determine whether the company generates enough revenue to justify holding a large amount of assets under the company’s balance sheet....