FMP
Jan 12, 2024 6:28 AM - Parth Sanghvi
Embark on a journey into the heart of operational efficiency with our exploration of key efficiency ratios. In this blog, we'll unravel the metrics that drive asset utilization, focusing on inventory turnover, receivables management, and other ratios that serve as indicators of a company's operational prowess.
Efficiency ratios are the pulse of a company's operational health, reflecting how effectively it utilizes its assets. Let's delve into two crucial ratios—inventory turnover and receivables turnover—and explore their significance in driving operational excellence.
Inventory turnover measures how efficiently a company manages and sells its inventory within a specific period. A high turnover indicates effective inventory management, reducing holding costs and ensuring fresher stock.
Receivables turnover assesses how well a company manages its receivables by measuring the number of times it collects outstanding payments during a specific period. A higher turnover signals effective credit management and swift cash conversion.
Beyond inventory and receivables turnover, other efficiency ratios contribute to a holistic understanding of asset utilization. Explore ratios like working capital turnover, fixed asset turnover, and total asset turnover, each providing unique insights into operational efficiency.
Efficiency ratios are the linchpin of operational excellence, guiding businesses toward optimal asset utilization. By mastering inventory turnover, receivables management, and other key metrics, companies can enhance their operational efficiency, bolster financial performance, and pave the way for sustainable success.
Sep 11, 2023 1:38 PM - Rajnish Katharotiya
Price to Earnings is one of the key metrics use to value companies using multiples. The P/E ratio and other multiples are relative valuation metrics and they cannot be looked at in isolation. One of the problems with the P/E metric is the fact that if we are in the peak of a business cycle, earni...
Sep 11, 2023 1:49 PM - Rajnish Katharotiya
Price-to-Earnings ratio is a relative valuation tool. It is used by investors to find great companies at low prices. In this post, we will build a Python script to calculate Price Earnings Ratio for comparable companies. Photo by Skitterphoto on Pexels Price Earnings Ratio and Comparable Compa...
Oct 17, 2023 3:09 PM - Davit Kirakosyan
Shares of VMware (NYSE:VMW) witnessed a sharp drop of 12% intra-day today due to rising concerns about China's review of the company's significant sale deal to Broadcom. Consequently, Broadcom's shares also saw a dip of around 4%. Even though there aren’t any apparent problems with the proposed solu...