The Present Chapter
This chapter discusses the concept of efficiency or activity ratios, as they are commonly referred to.
Operating Efficiency
Operating efficiency means how well a company is able to generate output from its inputs. Inputs consist of money, raw materials, assets, or people. Output can be in the form of sales generated, new customers, and so on.
Operating efficiency ratios are calculated to ascertain the efficiency with which a company utilizes its resources in order to generate revenues. They are also called as “activity or turnover ratios.”
Efficiency Ratios
Inventory Turnover Ratio
This ratio shows how many times a company’s inventory is sold and replaced over a period. It is an indication ...
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