Turnover ratios

Turnover ratios are financial metrics that measure how effectively a company uses its assets to generate sales or revenue. For example, inventory turnover indicates how many times a company's inventory is sold and replaced over a period, revealing efficiency in managing stock. Similarly, receivables turnover shows how quickly a company collects payments from customers. Higher ratios generally suggest efficient use of resources and good management, while lower ratios may indicate overstocking or collection issues. These ratios help investors and managers assess operational performance and asset utilization.