标题: duration in Activity ratios [打印本页] 作者: kim226 时间: 2011-7-13 16:07 标题: duration in Activity ratios
Number of days within Activity Ratios use 365 days as a standard practice for duration.
However, if the operating cycle is less than 365 days- would it be appropriate to substitue the new duration?
i.e. if the operating cycle is 180 days THEN
days of inventory on hand = 365/inventory turnover
WOULD BE CHANGED TO
days of inventory on hand = 180/inventory turnover
Is this correct.作者: draz 时间: 2011-7-13 16:07
generally, you need to annualize these numbers for comparison purposes, so for example, if you are doing a quarterly ratio analysis, you would multiply the AR for the quarter by 4 if you are doing receivables turnover so that quarterly ratios can be compared to YE ratios. hope this helps.
