Accounting Activity Measures

Accounting Activity Measures - means it takes less of a...

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Activity measures Turnover: o Total asset turnover: the efficiency with which assets are used to generate sales. o Inventory turnover: the efficiency of the firm’s inventory management practices. (It usually ranges from 1.0 to 1.5 but often ranges as high as 3.0.) Days’ sales outstanding (DSO): measures the average age of accounts receivable and reflects the efficiency of the firm’s collection policies relative to its credit terms. (A lower number
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Unformatted text preview: means it takes less of a time to collect accounts receivable. A higher number means it takes longer to collect accounts receivable and they are selling a lot on credit.) • Days’ sales of inventory (DSI): measures the number of days’ sales that could be made from inventory on hand. It reflects management’s ability to control inventories relative to sales. (The lower the better.)...
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This note was uploaded on 03/02/2011 for the course ACCT 502 taught by Professor Jaggi during the Fall '10 term at Rutgers.

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Accounting Activity Measures - means it takes less of a...

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