Hi tra5489!
Here are the definitions, formulae and calculations of the ratios you require.
* Average Collection Period
"The average collection period is the number of days required, on
average, to collect the amounts owed to the company by its customers"
How to keep score in business
http://www.alpineguild.com/how_to_keep_score_in_business.htm
"...The accounts receivable period is a measure of a company?s ability
to collect accounts receivable within a timely and reasonable period.
The accounts collection period varies from industry to industry. The
smaller the accounts receivable period, the more effectively a company
is in managing and collecting money from customers."
Financial Ratios
http://www.activemedia-guide.com/print_bused_finrat.htm
The formula for this ratio is:
ACP = Accounts Receivable / (Sales / 360 days)
(different sources sometimes use 365 days instead of 360, but the
final value for this ratio is not very different)
In your case, we have the the Accounts Receivable is 55.514, and
annual sales are 1968.016. Therefore, the ACP becomes:
ACP = 55.514 / (1968.016/360)
ACP = 55.514 / 5.4667
ACP = 10.15
The average collection period during 1999 was then 10.15 days.
* Inventory turnover
"The inventory turnover ratio measures the number of times during a
year that a company replaces its inventory. The turnover is only
meaningful when comparing other firms in the industry or a company?s
prior inventory turnover. Differences in turnover rates result from
differing operating characteristics within an industry...
"The higher the inventory turnover rate means the more efficiently a
company is able to grow sales volume"
Financial Ratios
http://www.activemedia-guide.com/print_bused_finrat.htm
The formula for the inventory turnover ratio is the following:
IT = (Cost of Goods Sold) / (Total Inventory)
In your case, the cost of goods sold during 1999 was 1466.733, while
the inventory was 322.433. Therefore,
IT = 1466.733 / 322.433 = 4.54 times
This means that the company fully replaced its inventory approximately
4.54 times during 1999.
* Total Asset Turnover
"The total asset turnover is a measure of how efficiently and
effectively a company uses its assets to generate sales... The higher
the total asset turnover ratio, the more efficiently a firms assets
have been used"
Financial Ratios
http://www.activemedia-guide.com/print_bused_finrat.htm
The formula for this ratio is:
Total Asset Turnover = Sales / Total Assets
In your case, Sales during 1999 were 1968.016, while Total Assets were
1117.96. Therefore,
Total Asset Turnover = 1968.016 / 1117.96 = 1.76
The total asset turnover for 1999 was 1.76, meaning that each $1 in
assets generated $1.76 in sales.
Google search terms
"average collection period" formula
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"inventory turnover" formula
://www.google.es/search?sourceid=navclient&hl=es&ie=UTF-8&rls=RNWE,RNWE:2004-53,RNWE:es&q=%22inventory+turnover%22+formula
"total asset turnover" formula
://www.google.es/search?sourceid=navclient&hl=es&ie=UTF-8&rls=RNWE,RNWE:2004-53,RNWE:es&q=%22total+asset+turnover%22+formula
I hope this helps! If you have any questions regarding my answer,
please don't hesitate to request a clarification. Otherwise I await
your rating and final comments.
Best wishes!
elmarto |
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