Day’s Inventory on Hand Ratio
Company needs to be well aware of the number of days it takes to sell its average level of inventories. This helps a lot in maintaining a decent level of inventory in the store and works as a great tool…
Category Activity Ratio
Activity Ratio is used to assess the entity’s ability to use assets, liabilities, and capital to generate sales and cash. It is further classified into the following ratios.
Accounts receivable turnover ratio
Days Payables Outstanding
Days payables outstanding is the activity ratio and it tells us the number of average days a company takes to pay its suppliers for the purchases. It is also known as number of days of payables and is denoted as…
Days Sales Outstanding Ratio
Days sales outstanding is an activity ratio and is used to know the average number of days a company takes to collect the payments from its customers for sales made to them on credit terms. This is also called day’s…
Accounts Payable Turnover Ratio
Company buys products and services from outside parties either on cash and credit. Mostly, the companies purchase these products and services on credit terms with its suppliers. In order to manage working capital cycle, this is of great importance to…
Accounts Receivable Turnover Ratio
In order to run a business smoothly and without cash issues, company management has to recover its receivables from sales made to customers. Most of the business sells its products and services to its customers on cash and credit terms.…
Inventory Turnover Ratio
Inventory turnover ratio is used to calculate how many times total inventory get sold out in the company. It is calculated by dividing cost of goods sold figure by inventory amount. The outcome comes in times. That is why; we say number…