Operations Ratios Calculator
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Calculator Use
This calculator will find solutions for up to four measures of the operations of a business or organization - inventory turnover, total asset turnover, average collection period, and equity multiplier. The calculator can calculate one or two sets of data points, and will only give results for those ratios that can be calculated based on the inputs provided by the user.
- If you are analyzing one company over a single reporting period, fill in the known data points in column A and press calculate - the results will display below.
- If you are analyzing two companies or a single company over two reporting periods, use both column A (primary) and B (secondary). For each data point and ratio that has a value in both columns, the change expressed as a percent increase or decrease will also be calculated.
The significant figures drop select box only determines rounding for the ratios themselves. Percent changes are always calculated to four significant figures.
Calculations Used in this Calculator
- Inventory Turnover = cost of goods sold ÷ inventory
- Total Asset Turnover = sales ÷ total assets
- Average Collection Period = accounts receivable ÷ (sales for reporting period ÷ reporting period length in days)
- Equity Multiplier = total assets ÷ shareholders' equity
Input Definitions
- Cost of Goods Sold
- Total of all expenses incurred in order to produce the product(s) being sold. Includes materials, labor/ manufacturing costs, licensing fees, etc...
- Inventory
- Total value of all unsold product.
- Sales
- Gross revenue for all products sold, does not factor in any expenses.
- Accounts Receivable
- Amounts owed to a company from customers who purchased a product or service on credit or a financing aggreement.
- Sales for Reporting Period
- Sales over a specified period. By default, the reporting period is 365 days (one year), but this can be adjusted for companies with non-standard fiscal year lengths e.g.- seasonal businesses that completely cease operations in the off-season.
- Shareholder's Equity
- Amount invested by shareholders into the company.
Ratio Definitions
- Inventory Turnover
- Measures the liquidity of a company's inventory.
- Total Asset Turnover
- Measures the efficancy of a company in using it's total assets.
- Average Collection Period
- The mean amount of time for a company to collect it's accounts recieivable, a measure of their credit and collections policies.
- Equity Multiplier
- Measures the portion of total assets purchased through equity.