Measuring Corporate Performance
3 important questions on Measuring Corporate Performance
What does EVA, ROC, ROA and ROE tell you?
How profitable the company is
What does the recievables turnover say?
It measures the firm's sales as multiple of its receivables. If customers are quick to pay, unpaid bills will be relatively small proportion of sales and the receivables turnover will be high.
What does the inventory turnover say?
Efficient firms don't tie up more capital than they need in raw materials and finsihed goods. They hold only a relatively small level of inventories of raw materials and finished goods, and they turn over those inventories rapidly.
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