DrugAnalyst Database

The average inventory investment period measures the amount of time it takes to convert a dollar of cash outflow, used to purchase inventory, to a dollar of sales or accounts receivable from the sale of the inventory.

The average collection period is an accounting metric used to represent the average number of days between a credit sale date and the date when the purchaser remits payment.

Return on assets (ROA) measures how efficient a company's management is in generating profit from their total assets on their balance sheet. ROA is shown as a percentage, and the higher the number, the more efficient a company's management is at managing its balance sheet to generate profits.

The debt-to-equity ratio (D/E ratio) shows how much debt a company has compared to its assets. It is found by dividing a company's total debt by total shareholder equity. A higher D/E ratio means the company may have a harder time covering its liabilities.

The current ratio compares all of a company's current assets to its current liabilities.

A good current ratio is between 1.2 to 2, which means that the business has 2 times more current assets than liabilities to covers its debts.

The fixed asset turnover ratio compares net sales to net fixed assets. It is used to evaluate the ability of management to generate sales from its investment in fixed assets. A high ratio indicates that a business is doing an effective job of generating sales with a relatively small amount of fixed assets.

The asset turnover ratio measures the efficiency of a company's assets in generating revenue or sales. It compares the dollar amount of sales (revenues) to its total assets as an annualized percentage.