Efficiency ratios Flashcards
1
Q
Debt collection period
A
How long it takes customers to pay
Average trade receivables / Credit sales per day
2
Q
Creditor payment period
A
How long it takes to pay suppliers
Average trade payables / Credit purchases per day
3
Q
Inventory turnover ratio
A
How quickly inventory moves through the business
Cost of sales / Average inventory
4
Q
Asset turnover ratio
A
Compares revenue to total assets employed
Revenue / Average total assets
