Analysis Of Operational Capability Financial Indicators

1. accounts receivable turnover index.

Accounts receivable turnover rate is used to reflect the turnover rate of accounts receivable.

First, it does not take account of the recovery time of accounts receivable, and can not accurately reflect the progress and equilibrium of annual accounts receivable.

Two, when sales are seasonal, especially when the difference between credit sales volume varies from year to year, this is the case.

Three, we can not provide timely information on accounts receivable turnover.

The index reflects the turnover of a certain period of time. It can only be calculated at the end of the year on the basis of annual sales and the average occupancy of accounts receivable.

2. inventory turnover index.

Inventory turnover is an indicator that reflects the strength of the enterprise's sales ability, whether the inventory is excessive and whether the assets have strong liquidity. It is also a comprehensive index to measure the efficiency of inventory operation in all links of production and operation.

In practice, the inventory valuation method has a greater impact on the inventory turnover rate. Therefore, when analyzing the inventory turnover rate of enterprises in different periods or different enterprises, we should pay attention to the consistency of inventory valuation methods.

In addition, in order to improve the rate of return on assets, business management may want to reduce inventory level and turnover period, sometimes influenced by human factors, which can not accurately reflect the operational efficiency of inventory assets.

At the same time, some related costs caused by excessive or low inventory level should not be neglected in the analysis. For example, low inventory level will lead to loss of customer reputation, sales opportunities and delayed production.

It is worth noting that high inventory levels and low inventory turnover do not necessarily indicate low efficiency in asset utilization.

The increase in inventories may be the result of a business strategy, such as prudent behavior due to shortages that may cause future supply disruptions, speculative actions to predict future price increases, and actions to meet the anticipated increase in demand for commodities.

In addition, for many enterprises that implement inventory control (such as just in time JIT) and zero inventories, the ratio will be meaningless.