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

  • Hawthorne studies
    Hawthorne studies is a one kind of series of studies during the 1920s and 1930s that provided ...
  • Pay-for-performance programs
    Pay-for-performance programs are variable compensation plans that pay employees on the ...
  • Strategic flexibility
    Strategic flexibility refers the ability to recognize major external changes, to quickly ...
  • Shaping behavior
    Shaping behavior is a process of guiding learning in graduated steps, using reinforcement ...
  • Operating Environment
    Factors in the immediate competitive situation that affect a firm’s success in acquiring ...