Efficiency Financial Ratios

The Asset Turnover Ratio is a financial metric that measures the efficiency of a company in using its assets to generate sales. It indicates how well a company is utilising its assets to produce revenue. A higher ratio signifies better performance and efficient asset utilisation.

The Days Payable Outstanding (DPO) ratio is a financial metric that measures the average number of days a company takes to pay its suppliers after receiving inventory or services. It provides insights into a company’s payment practices and liquidity. A higher DPO indicates that a company takes longer to pay its bills, which can be beneficial for cash flow management.

The Days Sales in Inventory (DSI) ratio is a financial metric that measures the average number of days a company takes to sell its entire inventory during a specific period. It indicates how quickly a company can convert its inventory into sales. A lower DSI value suggests efficient inventory management and quicker sales.

The Inventory Turnover Ratio is a financial metric that measures how often a company sells and replaces its inventory over a period. It indicates the efficiency of inventory management and how well a company converts its inventory into sales. A higher ratio suggests efficient inventory management and strong sales.

The Payables Turnover Ratio is a financial metric that measures how efficiently a company manages its accounts payable by determining how many times it pays off its suppliers within a specific period. This ratio helps assess the company's short-term liquidity and creditworthiness.

The Receivables Turnover Ratio is a financial metric that measures how efficiently a company collects its accounts receivable. It indicates how many times a company converts its receivables into cash within a specific period, reflecting the effectiveness of its credit and collection policies.