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Using the asset turnover ratio formula and the information above, we can calculate that Company ABC's asset turnover ratio this year was: $1,500,000 / [($975,000 + $1,140,000)/2] = 1.418 This means that for every dollar of Company ABC's assets, Company ABC generated $1.42 in revenue.
Learn how to use financial ratios to evaluate a company's performance, compare it with others, and conduct fundamental analysis. Find out the formulas, examples, and benchmarks for profitability, liquidity, leverage, market, and activity ratios.
Learn what an activity ratio is and how it measures how well a company generates revenue from its assets, liabilities and capital. See examples of common activity ratios such as inventory turnover and accounts receivable turnover.
Learn how to calculate ROA, a financial ratio that measures the profitability of a company relative to its total assets. Find out why ROA is important, how debt and leasing affect it, and how to compare it with other companies in the same industry.
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Receivables turnover ratio is a type of liquidity ratio that measures how quickly a company collects money from customers. It is calculated by dividing net credit sales by average accounts receivable.
The acid test ratio, also known as the quick ratio, measures how well a company can meet its short-term financial liabilities. It excludes inventory and other less liquid current assets from the calculation. Learn how to use the formula, interpret the results, and compare with other ratios.
ROE = Profit Margin x Total Asset Turnover x Leverage factor. The formula breaks down further to: ROE = (Net Income/Revenues) x (Revenues/Total Assets) x (Total Assets/ Shareholders' Equity) For example, let's consider the following information for Company XYZ: Using the formula above, we can calculate that Company XYZ's ROE is:
Accounts receivable (AR) are the amounts owed by customers for goods or services purchased on credit. They are classified as current assets and reported on the balance sheet. Learn how to calculate AR, use the A/R turnover ratio, and avoid bad debt.
Asset Turnover Ratio. Asset-or-Nothing Call Option. Asset-or-Nothing Put Option. Assets Under Management ...