Page 300 - Microsoft Word - 00 ACCA F2 Prelims.docx

Chapter 16

2.3 Measuring activity

Activity ratios look at how well a business manages to convert
statement of financial position items into cash. They are used to
investigate how efficiently current assets are managed.

 Asset turnover = Revenue ÷ capital employed

 Inventory days = inventory ÷ cost of sales × 365

 Receivable days = receivables ÷ credit sales × 365

 Payable days = payables ÷ credit purchased × 365

Illustrations and further practice

Now try TYU questions 1 and 2 from Chapter 16

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