Category Archives for "Dictionary"

Accounts Receivable (AR) – Meaning

Accounts receivable refers to the amount of money which a company has to collect from its debtors. The money so owed by customers is assumed to be collected within a financial year. Thus account receivable is part of current assets of a company. Usually accounts receivable occurs as a result of credit sale policy adopted […]

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Return on equity (ROE) – Meaning & Formula

Return on equity (ROE) is one of the profitability ratios used to measure the efficiency of a company to generate profit for its equity shareholders. This ratio indicates the relationship between net income and shareholder’s fund. Return on equity is also known as ‘Return on net worth’. Return on equity is used to compare the […]

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Working capital turnover ratio

Working capital turnover ratio shows the relationship between net sales and working capital of a company. One of the important sales ratios, working capital turnover ratio is used to gauge the efficiency of management to increase sales by using working capital of company. The higher degree of this ratio reflects better usage of working capital. […]

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Capital turnover ratio

One of the important sales ratios, Capital turnover ratio shows the relationship between net sales and capital employed. It  is used to measure the efficiency of management to generate revenue from companies’ capital. The higher degree of this ratio is better for a company in sense that capital is being used in effective way. Formula […]

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Capital gearing ratio – Meaning & Example

Capital gearing ratio represents the relationship between equity share capital of a firm and its fixed interest bearing funds. Fixed interest bearing funds include preference share capital, debentures, bonds and other type of loans which bear a fixed rate of interest on it. This ratio is used to measure the ‘degree of leverage’ of a firm. A […]

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