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

    Asset Turnover Ratio

    Investopedia explains: The asset turnover ratio is a measure of a company's ability to use its assets to generate sales or revenue, and is a calculation of the amount of sales or revenue generated ...
  2. Investing

    Dynamic Current Ratio: What It Is And How To Use It

    Learn why this ratio may be a good alternative to the current, cash and quick ratios.
  3. Investing

    Reading The Inventory Turnover

    Inventory turnover is a ratio that shows how quickly a company uses up its supply of goods over a given time frame. Inventory turnover may be calculated as the market value of sales divided by ...
  4. Investing

    Fund Transactional Activity

    Portfolio turnover is one of the simplest measures of mutual fund quality quality. Find out how to measure it.
  5. Investing

    Key Financial Ratios for Retail Companies

    Using the following liquidity, profitability and debt ratios, an investor can gather deeper knowledge of a retail company's short-term and long-term outlook.
  6. Investing

    Mutual Fund Due Diligence: 5 Things to Look Out for in Quarterly Reports

    Learn about five important items found in a mutual fund's annual and quarterly reports and why investors should pay attention to changes in these items.
  7. Investing

    Key Financial Ratios for Manufacturing Companies

    An investor can utilize these financial ratios to determine whether a manufacturing company is efficient, profitable and a good long-term investment option.
  8. Investing

    6 Steps to Build a Diversified Portfolio

    Following these six steps will help build a portfolio that is low cost and globally diversified.
Frequently Asked Questions
  1. Is there a maximum amount of stock an individual investor or corporation can purchase?

    The short answer is that there is no limit to the number of shares one entity may own in a specific company. The long answer ...
  2. Why don't stocks begin trading at the previous day's closing price?

    Between the closing bell and the next opening bell, a number of factors can affect the attractiveness of a particular stock ...
  3. What is the relationship between oil prices and inflation?

    Understand how the price of oil and inflation are often seen as being connected in a cause and effect relationship.
  4. What is the difference between a logarithmic price scale and a linear one?

    The interpretation of a stock chart can vary among different traders depending on the type of price scale used when viewing ...
Trading Center