1. Operating Performance Ratios: Introduction
  2. Operating Performance Ratios: Fixed-Asset Turnover
  3. Operating Performance Ratios: Sales/Revenue Per Employee
  4. Operating Performance Ratios: Operating Cycle

Operating performance ratios are tools which measure the function of certain core operations for an organization or business. Particularly, these ratios reveal information about how efficiently that organization is using resources to generate sales and cash. A company with strong performance ratios is able to utilize a minimum resource pool to generate high levels of sales, as well as a significant cash inflow. In this tutorial, we’ll examine some of the most commonly used operating performance ratios. By reading this tutorial, you should come away with a general sense of what these measures are, how they are determined, and what information or insight they can provide to those within a company or interested in investing. (Related: Ratio Analysis: Using Financial Ratios)

3 Main Operating Performance Ratios

There are three primary operating performance ratios we will consider. They include the following:

1. Fixed-asset turnover

2. Sales/revenue per employee

3. Operating cycle

Each of these ratios utilizes different inputs to measure varied portions or segments of a business’ overall performance. First, we’ll take a look at fixed-asset turnover.

 


Operating Performance Ratios: Fixed-Asset Turnover
Related Articles
  1. Investing

    How to Evaluate a Company's Balance Sheet

    Asset performance shows how what a company owes and owns affects its investment quality.
  2. Investing

    AR & Inventory Turnover Is Key For These Sectors

    Accounts receivable and inventory turnover are two important ratios in the current asset category. We will also discuss the key industries that benefit from a thorough understanding of these ...
  3. Investing

    Ratio Analysis

    Ratio analysis is the use of quantitative analysis of financial information in a company’s financial statements. The analysis is done by comparing line items in a company’s financial ...
  4. Investing

    Key Financial Ratios to Analyze The Automotive Industry

    Learn about the most critically important financial ratios investors and market analysts utilize to evaluate companies in the automotive industry.
  5. Investing

    6 Steps to Build a Diversified Portfolio

    Following these six steps will help build a portfolio that is low cost and globally diversified.
  6. Investing

    Financial Ratios to Spot Companies Headed for Bankruptcy

    Obtain information about specific financial ratios investors should monitor to get early warnings about companies potentially headed for bankruptcy.
Frequently Asked Questions
  1. What are general and administrative expenses?

    General and administrative expenses are not directly attributable to the production of goods and services and include audit ...
  2. Why is social responsibility important to a business?

    Companies that engage in social responsibility help improve the company's brand, attract and retain top talent, and improve ...
  3. How do currency swaps work?

    Learn how a currency swap works, including who uses these transactions, and the mechanics and purpose of the different cash ...
  4. What is a debt/equity swap?

    Learn why companies issue debt/equity swaps, what they are, and how they impact shareholders and debt holders.
Trading Center