# Inventory Ratio Formula

Finance / July 14, 2018 / Isabella Mccray

For some businesses, like restaurants and some retailers, cash is really cash - currency and paper money. The business takes cash from customers and sometimes pays its bills in cash. Cash businesses have a special issue with keeping track of cash flow, especially since they may not track income unless there are invoices or other paperwork.

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Both of these measurements are key concepts for management in any industry. Retailers can use it to see how much product they must sell to meet their minimum costs. Manufacturers can calculate the amount of product that must be produced and sold during a period.

There are two basic parts to the cost of a car loan the principal and the interest. The principal is the negotiated cost of the vehicle itself. The interest refers to the total amount of the costs accrued over the life of the loan based on the principal amount and the stated interest rate.

The asset turnover ratio, also known as the total asset turnover ratio, measures the efficiency with which a company uses its assets to generate sales. The asset turnover ratio formula is equal to net sales divided by the total or average assets of a company. A company with a high asset turnover ratio operates more efficiently compared to competitors with lower ratios.

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