Practicing Success
Which ratio is a measure of the speed with which various accounts are converted into sales or cash? |
Liquidity Debt Activity Profitability |
Activity |
Activity (or Turnover) Ratio: These ratios indicate the speed at which, activities of the business are being performed. The activity ratios express the number of times assets employed, or, for that matter, any constituent of assets, is turned into sales during an accounting period. Higher turnover ratio means better utilisation of assets and signifies improved efficiency and profitability, and as such are known as efficiency ratios. |