MAFundamentals defines the foundation of Management Accounting from cost concept, classification and analysis. It provides general discussion on COST, VOLUME, PROFIT, VARIANCE and other information necessary for performance measurement, decision making and pricing.

Asset Management Ratios

Firms or companies measure on how it uses its asset to generate revenue and income using Asset Management Ratios

Learn more about FS Analysis Techniques 

There are eleven (11) types of ratios covered.
  1. Finished Goods or Merchandise Inventory Turnover
    FORMULA SIGNIFICANCE
    Cost of Sales
    Average Inventory     		Shows if the firm holds excessive stocks of inventories that are unproductive and that lessen the company's profitability.

  2. Average Age of Inventories or Number of Days of Inventory
    Number of days in a Year
    Inventory Turnover Ratio

    or

    Average Inventory

    Average Daily Cost of Sales    		Measures the average number of days that the inventory is held before sale.

  3. Receivables Turnover Ratio
    Net Credit Sales
    Average Accounts Receivables    		Shows the average days the receivables are collected.

  4. Average Age of Receivables or Number of Days of Receivables or Average Collection Period
    Number of Days in a Year
    Receivables Turnover Ratio

    or

    Average Accounts Receivables

    Average Daily Sales    		Measures the average number of days to collect receivable.

  5. Operating Cycle or Conversion Period
    Average Age of Inventories + Average Age of ReceivablesMeasures the average number of days to convert inventories to cash

  6. Average Age of Accounts Payable
    Average Accounts Payable
    Average Daily Purchases    		Determines whether the firm is paying its invoices on a timely basis.

  7. Fixed Asset Turnover Ratio
    Net Sales
    Average Net Fixed Asset    		Measures the level of use of property, plant, and equipment.

  8. Total Asset Turnover Ratio
    Net Sales
    Average Total Assets
    Measures the level of capital investment relative to sales volume.

  9. Total Capital Turnover Ratio
    Net Sales
    Total Capital*

    *Total Capital = total asset having explicit costs (equity + interest bearing debt)    		Measures the level of total assets having explicit costs relative to sales volume.

  10. Investment Rate
    Total Capital, 200B - Total Capital, 200A
    Total Capital, 200A    		Shows the percentage change in total capital.

  11. Plowback Ratio
    Amount Available for Reinvestment
    Net Income    		Measures the percentage of net income available for investment. Higher rate means less external financing.