The given values are Net Sales for the year = $ 15,000, Total assets at the beginning of the year = $ 11,500 and Total assets at the end of the year = $ 12,000. Let us take an example to calculate the Total Assets Turnover Ratio. It shows that sales and, specifically, credit sales are 20 times the accounts receivable outstanding, which is a good turnover to have, but it should be compared to previous year’s data as well as other players in the industry to have a complete analysis.
Accounts Receivable Turnover Ratio = 20 times. Accounts Receivable Turnover Ratio = 60,000/ 3,000. Average Accounts Receivables = 2,500 + 3,500 / 2Īccounts Receivable Turnover Ratio is calculated using the formula given below.Īccounts Receivable Turnover Ratio = Credit Sales / Average Accounts Receivables. What are the Accounts receivable turnover ratio of the company?Īverage Accounts Receivables is calculated using the formula given below.Īverage Accounts Receivables = Opening + Closing / 2 At the beginning of the financial year, Accounts Receivables were $ 2,500, and at the end, accounts receivables were $ 3,500. Let us take another example of a company which is having net credit sales worth $ 60,000 during one financial year. Working Capital Turnover Ratio of six times shows that sales in 6 times that of employed assets of working capital should be compared to the previous year’s data as well as other players in the industry to get a better sense. Working Capital Turnover Ratio = 6 Times. Working Capital Turnover Ratio = 15,000 / 2,500. Working Capital Turnover Ratio = Net Sales / Working Capital 
Working Capital Turnover Ratio is calculated using the formula given below. Working Capital = Current Assets – Current Liabilities
Working Capital is calculated using the formula given below What is the Working Capital Turnover ratio of the company? Whose revenue from operations or net sales for a period is $ 15,000, and its current assets and current liabilities for the period are $ 10,000 and $ 7,500, respectively. Let us take another example of a company Mobility Inc.
It shows that the inventory turnover ratio is 3 times, and it should be compared to the previous year’s data as well as other players in the industry to get a better sense. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Inventory Turnover Ratio is calculated using the formula given below
Cost of Goods Sold = 2,000+ 16,000 – 6,000Īverage Inventory is calculated using the formula given belowĪverage Inventory = (Opening Inventory + Closing Inventory) / 2. Calculate Apple Inc.’s fixed assets turnover ratio based on the given information.Cost of Goods Sold is calculated using the formula given belowĬost of Goods Sold = Opening Inventory + Purchases – Closing Inventory During the year, the company booked net sales of $260,174 million, while its net fixed assets at the start and end of 2019 stood at $41,304 million and $37,378 million, respectively. Let us take Apple Inc.’s example now’s annual report for the year 2019 and illustrate the computation of the fixed asset turnover ratio. was more effective in the use of its fixed assets during 2019. Therefore, XYZ Inc.’s fixed asset turnover ratio is higher than that of ABC Inc., which indicates that XYZ Inc. Fixed Asset Turnover Ratio = $70 million / $24 million. Fixed Asset Turnover Ratio = $50 million / $22 million. The formula to calculate the Fixed Asset Turnover Ratio is as below:įixed Asset Turnover Ratio = Net Sales / Average Net Fixed Assets Average Net Fixed Assets = ($22 million + $26 million) / 2. Average Net Fixed Assets = ($20 million + $24 million) / 2. The formula to calculate Average Net Fixed Assets is as below:Īverage Net Fixed Assets = (Opening Net Fixed Assets + Closing Net Fixed Assets) / 2 According to the latest annual reports, the following information is available: Also, calculate which company utilizes its fixed assets better. Calculate the fixed assets turnover ratio of both of those businesses on the basis of the above-given information. Both companies belong to the same industry of ice cream manufacturing. and XYZ Inc., to illustrate the fixed asset turnover ratio concept. Let us take the example of two companies, ABC Inc. You can download this Fixed Asset Turnover Ratio Formula Excel Template here – Fixed Asset Turnover Ratio Formula Excel Template Example #1
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