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Thursday, June 9, 2011

Sales to Current Assets Ratio

Definition: Sales to Current Assets Ratio is used to measure how well a company is making use of its assets in generating sales revenue. A high ratio may indicate deficient working capital.

Formula:
Sales to Current Assets = Net Sales / Total Current Assets
(Note: Current assets include Cash, Bank, Marketable Securities, Accounts Receivable, Inventories, Prepaid Expenses)

Example:
Euro Company

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