Accounting 100 Exam 2 Ratios

Receivables Turnover Ratio - Managing Receivables

Higher is better

Average Collection Period - Managing Receivables

Captures the number of days that the average accounts receivable balance is outstanding - lower is better

Inventory Turnover Ratio - Managing Inventory

Shows the number of times the firm sells its average inventory balance during a reporting period - higher is better

Average Days in Inventory - Managing Inventory

Indicates the approximate number of days the average inventory is held - lower is better

Gross Profit Ratio - Profitability

Measures the amount by which the sale price of inventory exceeds its cost per dollar of sales - higher is better

Annual Depreciable Expense

Profit Margin - Profitability

Asset Turnover

Return of Assets - Profitability

higher is better

Cash Holding Ratio

Investment to Asset Ratio

Return on Investment Ratio