Archive | Activity Ratios

Days Sales Outstanding

The days sales outstanding shows the average number of days your customers are taking to pay you. It is calculated by dividing average accounts receivables by the daily credit sales.

Accounts Receivable Turnover Calculator

The accounts receivable turnover measures the number of times accounts receivable is collected or converted into cash during an accounting period, and is an indication of the quality of the accounts receivables management system in the business.

The Excel receivables turnover ratio calculator, available for download below, is used to compute accounts receivable turnover by entering details relating to the net credit sales and the opening and closing accounts receivable balances.

Inventory Turnover Ratio Calculator

The inventory turnover ratio measures the number of times the inventory of a business is converted into sales or used during an accounting period.

The Excel inventory turnover ratio calculator, available for download below, is used to compute inventory turnover by entering details relating to the cost of goods sold and the opening and closing inventory levels.

Inventory Days

The Inventory Days ratio shows the average number of days sales a business is holding in its inventory. It is calculated by dividing inventory by average daily cost of goods sold. It is sometimes called the Stock Days ratio.

Creditor Days Ratio

The creditor days ratio shows the average number of days you take to pay your suppliers. It is calculated by dividing creditors by average daily purchases.

What are Activity Ratios?

Activity ratios are used to measure the ability of a business to convert different balance sheet accounts such as stock, debtors, and creditors into cash or sales, and the managements ability to control the resources of the business.

Debtor Days Ratio

The Debtor Days ratio shows the average number of days your customers are taking to pay you. It is calculated by dividing debtors by average daily sales.