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

  • Unity of command
    The management principle that each person should report to only one manager. Without unity ...
  • Business performance management
    IT software that provides key performance indicators to help managers monitor efficiency ...
  • Transnational organization
    Other companies use an arrangement that eliminates artificial geographic barriers. This ...
  • Telecommuting
    Telecommuting is a job approach in which employees work at home and are linked to the ...
  • Social learning theory
    A theory of learning that says people can learn through observation and direct experience, ...