Operations Ratios Calculator
Measure how hard your assets are working. This calculator analyzes your sales and inventory data to reveal how efficiently your business is operating compared to industry standards.
What are operations ratios?
Operations ratios (or efficiency ratios) measure how effectively a company uses its assets and manages its operations. They provide insight into the speed at which a company turns its inventory into sales or collects its receivables.
How do I interpret Inventory Turnover?
Inventory turnover shows how many times a company has sold and replaced its inventory during a specific period. A higher ratio generally indicates strong sales or efficient inventory management, while a low ratio may suggest overstocking or weak sales.
What is the "Average Collection Period"?
The average collection period represents the average number of days it takes for a company to receive payment from its customers after a sale has been made on credit. Lower numbers are usually better, indicating faster cash flow.
What does Total Asset Turnover tell you?
Total asset turnover measures a company's ability to generate sales from its assets. It compares net sales to average total assets. For example, a ratio of 2.0 means that for every $1 in assets, the company generated $2 in sales.