Key Management Ratios: The Clearest Guide to the Critical Numbers That Drive Your Business, Fourth Edition

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 utilized. 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 utilization ratios’ is also used in this context.

amortization of loan

The repayment of a loan by equal periodic payments that include both interest on outstanding balance plus some repayment of principal.

annuity

A series of equal payments made at equal intervals of time. Many ...