Financial Ratios - Operating Ratios

Operating Ratios

Operating Ratios also called ‘Activity ratios’ or the ‘Management ratios’ indicate the efficiency of the company’s operational activity. To some degree, the operating ratios reveal the management’s efficiency as well. These ratios are called the Asset Management Ratios, as these ratios indicate the efficiency with which the assets of the company are utilized.19 

zerodha.com/varsity Some of the popular Operating Ratios are:

1. Fixed Assets Turnover Ratio

2. Working Capital Turnover Ratio

3. Total Assets Turnover Ratio

4. Inventory Turnover Ratio

5. Inventory Number of Days

6. Receivable Turnover Ratio

7. Days Sales Outstanding (DSO)

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