Measures of Financial Performance
(from Anthony and Reece, 1979)

Tests of Investment Utilization
Name of Ratio Formula State Results As
Asset
Turnover 
Sales Revenues
Total Assets
 Times
Invested capital
turnover 
Sales Revenues
(Long-Term Liabilities + Shareholders' Equity)
 Times
Equity
turnover 
Sales Revenues
Shareholders' Equity
 Times
Capital
intensity 
Sales Revenues
       Property, Plant, and Equipment
 Times
Days'
cash 
Cash
(Cash Expenses + 365)
 Days
Days' receivables
(or collection period)		 
Accounts Receivable
       (Sales + 365)
 Days
Days'
ratio 
Inventory
(Cost of Sales + 365)
 Days
Inventory
turnover 
Cost of Sales
Inventory
 Days
Working capital
turnover 
Sales Revenues
Working Capital
 Times


Notes