The-definition.com

Definition

Activity Ratios

Activity ratios indicate how effectively a firm is using its resources. By comparing revenues with the resources used to generate them, it is possible to establish an efficiency  of operation. The asset turnover ratio indicates how efficiently management is employing total assets. Asset turnover is calculated by dividing sales by total assets.


Activity ratios are the measures of how efficiently a firm utilizes its assets.


Activity ratio measure (e.g., accounts receivable turnover) of how efficiently assets are being used to generate revenues.

Share it:  Cite

More from this Section

  • Grand strategy clusters
    Strategies that may be more advantageous for firms to choose under one of four sets of ...
  • Empowerment
    Empowerment is the act of allowing an individual or team the right and flexibility to ...
  • Substitute Products
    By placing a ceiling on the prices it can charge, substitute products or services limit ...
  • Conglomerate Diversification
    A grand strategy based on the acquisition of a business because it presents the most promising ...
  • Divestiture
    Divestiture means the sale or removal of a business/firm or a major component . It refers ...