Turnover Ratios

Definition: The Turnover Ratios measure the efficiency of investments made by the firm in the form of revenues and the cost of sale generated during a period of time. These ratios show the relationship between the revenues or cost of sales generated due to the investment activities undertaken.

Some important Turnover Ratios are:

• Inventory Turnover Ratio
• Debtors Turnover Ratio
• Average Collection period
• Fixed Asset Turnover Ratio
• Total Assets Turnover Ratio
• Capital Employed Turnover Ratio

The turnover ratios are also called as activity ratios or asset management ratios; that shows a relationship between sales and assets. These ratios are expressed in terms of integers or times.