How can you measure how efficient your business or your competitors is? How can you know where you can improve? What about measuring the right amount of debt? Luckily, there are financial ratios you can use to answer all of these questions. In this lesson you'll learn how to measure a businesses efficiency and financial position through four ratios: • Asset turnover ratio • Inventory turnover ratio • Debt to equity • Interest coverage ratio
How does the inventory turnover ratio tell us about a company's efficiency?