Definition of Turnover Ratios
In accounting, turnover ratios are the financial ratios in which an annual income statement amount is divided by an average asset amount for the same year. Generally, the larger the turnover the better.
The turnover ratios indicate the efficiency or effectiveness of a company’s management.
Examples of Turnover Ratios
Some of the turnover ratios are:
- accounts receivable turnover ratio
- inventory turnover ratio
- total assets turnover ratio
- fixed assets turnover ratio
- working capital turnover ratio
To assist you in computing and understanding accounting ratios, we developed 24 forms that are available as part of AccountingCoach PRO.
You can also read our Explanation of Financial Ratios.
