Return on total assets (ROA), a significant measure of entrepreneurial effectiveness, is a combination of the sales-profitability measure and an asset-utilization ratio. By calculating each component of the
Capitalization refers to a company’s long-term financing – the investment made in the company by long-term creditors and owners. Common Capitalization Ratios Ratios can show the relationship of
Several ratios measure the utilization or turnover of a company’s assets or liabilities. The most widely used is called the Receivables Collection Period or Days Sales Outstanding. The
Liquidity refers to a company’s ability to meet its current obligations. These ratios, then, are related to a company’s assets and liabilities classified as current (by definition, likely
Profitability is measured in two ways Profits related to revenue and Profits related to investment. Profitability relative to revenue: The gross measure of profitability on revenue is the
Sales promotions are vital for companies to increase sales and project their brand names. Sales promotion has its own advantages and disadvantages. When used moderately with careful planning,
Evaluating profitability is an assessment requiring considerable managerial experience, insight, and judgment. It is, perhaps, easier in this area to lay out a few rules than in the
Guidelines for effective credit management Effective management of accounts receivable includes not only evaluating and authorizing trade-credit extensions but also constantly supervising your credit customers’ accounts. In routine
The financial characteristics of an industry are closely related to that industry’s production process, marketing activities, and financial practices and customs. The characteristics of a company in the
Irrespective of how a company resolves the issue of “make or buy” or achieves vertical integration, some services and goods have to be purchased. The efficiency of a