What's it: The asset turnover ratio is a financial ratio to measure the overall efficiency of business operations. It shows how well the company utilizes its resources to generate revenue. We divide revenue by the average total assets
Financial Ratio
Defensive Interval Ratio: Importance, Calculation, and Interpretation
What's it: The defensive interval ratio is a financial ratio to measure how long a company can continue to meet daily expenses using existing liquid assets without obtaining additional financing. We calculate it by adding up liquid
Cash Ratio: Formula, Calculation, and Interpretation
What's it: The cash ratio is a financial ratio to measure a company's ability to meet its short-term liabilities. It is the most conservative ratio in measuring liquidity compared to the current ratio or quick ratio. This is because it
Cash Conversion Cycle: How it Works, Calculation and Interpretation
What's it: The cash conversion cycle measures how long, in days, it took a company to collect cash since the money was spent on buying raw materials. The shorter the cycle, the faster the company generates cash from its investment in selling
Debt-to-Assets Ratio: Calculation and Interpretation
What's it: The debt-to-assets ratio is a leverage ratio to measure the extent to which a company depends on debt to finance its assets. We calculate it by dividing total debt by total assets. Debt is a capital alternative to equity. When a
Debt-to-Capital Ratio: How to Calculate and Interpret
What's it: The debt-to-capital ratio is a leverage ratio calculated by dividing the total debt by the company's total capital. Total capital equals total debt plus total equity. A higher ratio indicates high leverage. A company depends more