ADAMSON UNIVERSITY

MANAGERIAL ACCOUNTING 1
Summary of Ratios (Additional)
Ratio
Average Payment Period

Fixed Assets Turnover

Debt Ratio

Operating Profit Margin

Formula
Relevance
Accounts
Payable/Average Measures
the
average
Purchases per day*
length of time it takes to
pay suppliers
*Annual
Purchases
on
Credit/365 days
Sales/Net Fixed Assets
Measures the efficiency with
which the firm uses its fixed
assets; how many Pesos of
sales the firm generates per
Peso of net fixed assets
investment
Total Liabilities/Total Assets
Measures the proportion of
total assets financed by the
firms creditors; the higher
the ratio, the greater the
firms reliance on borrowed
money
to
finance
its
activities.
Operating Profits/Sales
Measures the percentage of
each Peso Sales remaining
after deducting all costs and
expenses
other
than
Interest and Taxes