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# i just need Asset utilization of the attached calculation for 1000 words XXXXXXXXXXjust need explanation of ratio asset utilization recommendation reference it does not need introduction etc

i just need Asset utilization of the attached calculation for 1000 words
XXXXXXXXXXjust need explanation of ratio
asset utilization
recommendation
reference
it does not need introduction etc

Answered Same Day May 13, 2020

## Solution

Shakeel answered on May 15 2020
Key ratio analysis
Efficiency ratio shows the management efficiency to convert the assets and Inventory of firm into sales. Here, six major efficiency ratios - Inventory turnover ratio, Receivable turnover ratio, fixed assets turnover ratio, total assets turnover ratio, days sales in inventory and average collection period are used.
Inventory turnover ratio
This ratio shows how fast inventory is converted into finished goods and then sold. Mathematically, it is defined as
Cost of goods sold / Average inventory
Where, Average inventory is calculated by (Opening balance of Inventory +                             Closing balance of inventory)/2
In 2016, Inventory turnover ratio is 4.62 for Tassal and 12.43 for Huon. In 2017, it is 3.16 and 13.22 for Tassal and Huon respectively. The absolute value of Inventory turnover ratio of Huon is higher than Tassal. Further, the Tassalâ€™s efficiency in conversion of Inventory into sales has declined while that of Huon has inclined from 2016 to 2017.
Account receivable turnover ratio
This ratio shows the number of times per year that a business collects its average account receivable. This ratio tells about the companyâ€™s efficiency in extending the sales credit to its customers and collects the account receivable from them.
It is calculated by using the formula -
Net credit sales / Average account receivables
Where, Average account receivable is calculated by (Opening balance of                         Inventory + Closing balance of inventory)/2
From 2016 to 2017, the Account receivable turnover ratio of Tassal increases from 6.05 to 15.44 while for Huon, it increases from 3.84 to 4.41. The percentage increase...
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