FREE online courses on Financial Ratio Analysis - Efficiency Ratios - Efficiency Ratios

 

A second group of detail ratios is Efficiency Ratios. Efficiency Ratios measure the ability of assets to generate revenues or earnings. They also compliment our liquidity ratios. We looked at one asset management ratio already; namely Total Asset Turnover when we analyzed Return on Equity. We will now look at five more Efficiency Ratios: Accounts Receivable Turnover, Days in Receivables, Inventory Turnover, Days in Inventory, and Capital Turnover.