Fixed asset turnover ratio

Fixed asset turnover ratio is an activity ratio. It tells about us the performance of the company regarding its utilization of fixed assets to generate revenue. Fixed asset turnover formula It is calculated by dividing net revenue by the average…

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…

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…

Comparability Concept

Comparability is also an important accounting principle. It requires that financial information must be comparable from one accounting period to another. But, this is possible only if the entity is using the same accounting policies from one period to another. Ratio…

Consistency Concept

Consistency Concept has fundamental importance in the preparation of financial statements. According to this, an entity must continue to use the same accounting policies from one period to another and so on. This ensures consistency of accounting policies and makes…