Total Asset Turnover Edit
Total Asset Turnover = Sales Revenue/[(Total Assets at Beginning of the Period + Total Assets at End of the Period)/2]
Standard value set by the enterprise: 0.8
Significance: the index reflects the Turnover speed of total assets, the faster the turnover, the stronger the sales capacity. Enterprises can use thin profits to accelerate the turnover of assets and bring about an increase in the absolute amount of profits.
Analysis tips: total assets turnover indicator is used to measure the ability of the enterprise to use assets to earn profits. It is often used in conjunction with profitability indicators to fully evaluate the profitability of an enterprise.
Accounts Receivable Turnover Edit
Accounts Receivable Turnover
Definition: The average number of times accounts receivable are converted to cash during a specified period of analysis.
Formula: Accounts Receivable Turnover = Sales Revenue/[(Beginning Accounts Receivable + Ending Accounts Receivable)/2]
Standard value set by the company: 3
Significance: The higher the accounts receivable turnover rate, the faster it is collected. On the contrary, it indicates that too much working capital is stagnant in accounts receivable, which affects normal capital turnover and solvency.
Analysis tips: accounts receivable turnover rate, to be considered in conjunction with the business approach. The following situations using this indicator can not reflect the actual situation: first, seasonal business enterprises; second, a large number of installment receipts using settlement; third, a large number of sales using cash settlement; fourth, a large number of sales at the end of the year or a significant decline in sales at the end of the year.
Inventory Turnover Edit
Inventory Turnover = Cost of Products Sold
/
[(Beginning Inventory + Ending Inventory)/2]
Standard value set by the enterprise: 3
Significance: Turnover of inventory is the main indicator of the speed of inventory turnover. Improving the inventory turnover rate and shortening the business cycle can improve the liquidity of the enterprise.
Analysis tips: inventory turnover rate reflects the inventory management level, the higher the inventory turnover rate, the lower the occupancy level of inventory, the stronger the liquidity, the faster the inventory is converted into cash or accounts receivable. It not only affects the short-term solvency of the enterprise, but is also an important element of the whole enterprise management.
Business Cycle Editor
Business Cycle=Inventory Turnover Days+Accounts Receivable Turnover Days
={[(Beginning Inventory + Ending Inventory)/2]*
360}/Cost of Goods Sold + {[(Beginning Receivable + Ending Receivable)/2]*
360}/Revenue from Product Sales
Standard value set by the enterprise: 200
Significance: The business cycle is the time from the beginning of the acquisition of inventory to the sale of inventory and recovery of cash. In general, a short operating cycle indicates a fast turnover of funds; a long operating cycle indicates a slow turnover of funds.
Analysis tips: business cycle, generally should be combined with inventory turnover and accounts receivable turnover and analyze. The length of the business cycle not only reflects the level of asset management, but also affects the solvency and profitability of the enterprise.
Currently, the more professional information on business indicators is Di Zhenpeng's book "Business is to grasp the indicators: assessment with indicators, let the results speak". The main content includes the following: financial indicators, sales indicators, cost indicators, assessment indicators, administrative indicators, production and warehousing indicators and so on.