Efficiency

7 pages carry this tag.

Concept Guides

Concept Guide

Efficiency Ratios

Efficiency ratios measure how productively a company uses its assets to generate revenue.

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Formulas & Ratios

Formula

Asset Turnover

Asset turnover measures how much sales a company generates from each rupee of assets: plant, machinery, computers, land.

Formula

Cash Conversion Cycle

The cash conversion cycle is the number of days between paying for raw material and receiving cash from the final sale.

Formula

DuPont Analysis

DuPont analysis breaks return on equity into three drivers, margin, asset turnover, and leverage, so you can see whether a high ROE was earned or borrowed.

Formula

Working Capital Days

Working capital days are the three components of the cash conversion cycle: how long stock sits before it is sold, how long customers take to pay, and how long the company takes to pay its suppliers.

Formula

Fixed Asset Turnover

Fixed asset turnover measures how much sales a company generates from its plant, machinery, and buildings alone, leaving out cash, inventory, and receivables.

Glossary

Asset Turnover

Measures how efficiently a company uses its assets to generate revenue. Higher ratio indicates better efficiency.