Operating Performance Ratios Excel Template Calculator

Operating performance ratios measure the company's financial results and the assets related to the achievement of those results. Financial operating performance ratios include: - Fixed Assets Turnover Ratio - Sales or Revenue per Employee - Operating Cycle - Cash Conversion Cycle - Account Receivable Turnover Ratio - Accounts Payable Turnover Ratio - Inventory Turnover Ratio Understanding operating performance is important for effective financial management. Top-performing companies are always efficient in financial management, while poorly performing companies often have underlying issues. The fixed assets turnover ratio measures how efficiently a company uses its fixed assets to generate its sales. For this ratio, it is useful to perform trend analysis to make sense of this ratio. The fixed assets turnover ratio measures the relationship between sales and fixed assets and shows how well a company utilizes property, plant & equipment to generate revenue. The sales or revenue per employee ratio shows the relationship between average employee figures and sales. This ratio results are highly driven by industry and strategic management choices. The sales or revenue per employee ratio shows the revenue generated per employee on average. The operating cycle estimates the number of days a company takes to convert inventory to cash on average. It combines the impacts of both the time to sell inventory and the time to collect cash from accounts receivable. The cash conversion cycle reflects the time between cash outflows and cash inflows resulting from the production process. It shows how fast a company can convert its products into cash. The shorter the cycle, the less time capital is tied up in the business process, and thus the better for earnings. The accounts receivable turnover shows the average for the number of days a company takes to collect its outstanding receivables. The AR turnover ratio is an indicator of the operating efficiency of money collection. For the accounts payable turnover ratio calculation, there are the same principles as for the accounts' receivable turnover ratio, except that accounts payable is being addressed. The inventory turnover ratio shows the average number of times inventory is sold during a reporting period. The ratio can be expressed either by the number of times during the period, or by the number of days. As with every turnover ratio, this is a measure of efficiency in operations. The quicker a company can sell its inventory, the better.

Operating Performance Ratios Excel Template