Definition: The Turnover Ratios measure the efficiency of investments made by the firm in the form of revenues and the cost of sale generated during a period of time. These ratios show the relationship between the revenues or cost of sales generated due to the investment activities undertaken.
Some important Turnover Ratios are:
- Inventory Turnover Ratio
- Debtors Turnover Ratio
- Average Collection period
- Fixed Asset Turnover Ratio
- Total Assets Turnover Ratio
- Capital Employed Turnover Ratio
The turnover ratios are also called as activity ratios or asset management ratios; that shows a relationship between sales and assets. These ratios are expressed in terms of integers or times.