Lecture notes

topic 3.6: Efficiency ratio analyses

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Module
International Baccalaureate

Institution
International Baccalaureate

These are all the notes needed for the topic 3.6 of IB Business Management. This summarizes all relevant theories, formulas, data and information needed for IB learners.

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Uploaded on May 17, 2023
Number of pages 3
Written in 2022/2023
Type Lecture notes
Professor(s) Z fr
Contains All classes

business
business management
finance
topic 3
formulas
ratio
probability
sources
account
efficiency
analysis
stock turnover
debtor days
creditor days
gearing ratio

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Set
Efficiency ratio

-Shows how well a firm's resources have been used, such as the amount
of time taken by firm to
the sell its stock/inventory or
average number
the
of days taken to money from
collect its debtors

sell their stock faster than
-

Ex:supermarkets luxury jewellers.

Stock turnover:

-Stock turnover ratio (inventory turnover ratio) number
measures the of times
a firm sells its stocks within a time period (usually 1 year).
Indicate the which firm sells all its stock.
-> speed at a
replenishes
->
The higher stock turnover, the
higher of
amount stock is sold

->
More efficient in
generate profit.

Stock turnover costs of goods sold
-

E
(number of times) average stock
in
* the
formula
sheet stock turnover
number ofdays) coteroid
=
165

-ways to
reduce stock level to improve stock turnover ratio:

·
Be replenished more regularly
-
to hold lower stock levels
·
Divestment (disposal) of stocks which are slow to sell

Getting firm's
rid of obsolete stock in the portfolio)
Reduce the range of products being stocked only keep best-
·
-

selling products.

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