Glossary
All items in italics are defined elsewhere in the glossary
Acid test See quick ratio.
Activity ratios These measure the relationship between key assets and sales. They express how well assets are being utilised. For instance, ‘accounts receivable days’ (see debtor days) shows how long cash is tied up in accounts receivable; likewise inventory days. We use the sales to fixed assets ratio to give a measure of the output being generated by major fixed assets. The term ‘asset utilisation ratios’ is also used in this context.
Amortisation of loan The repayment of a loan by equal periodic payments that include both interest on outstanding balance plus some repayment of principal.
Asset backing Also known as ‘asset value per share’, it is ...
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