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Financial efficiency ratios


There are three main ratios that can be used to measure the financial efficiency of a
business:
1. The asset turnover ratio.
2. The stock turnover ratio.
3. The debtor days ratio.

The asset turnover ratio

This measures the productivity of the business (i.e. how many pounds…

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much higher stock turnover (especially for vegetables, fruit and other perishables) than a retailer such
as 'Dixons' (for televisions, washing machines, etc).

The debtor days ratio

This shows how long, on average, a business takes to collect the debts owed to it by customers who
have purchased their goods on…

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