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Turnover ratios

Ankur Aggarwal (Professional) (45 Points)

12 November 2012

Under Ratio Analysis Turnover ratios like Fixed asset Turnover ratio, Working capital turnover ratio etc has to calculate with Net sale or Cost of good sold? Different- differnet books has been diifferent-different formauls. Is there any Statutory provision under any act define Formulas for ratio analysis please provide those.

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4 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 12 November 2012

It shud be relating to Sales

ANJALI NEGI (Chartered Accountant) (1263 Points)
Replied 12 November 2012

As per my knowlege they should be calculated on net sales only!!!

Ankur Aggarwal (Professional) (45 Points)
Replied 12 November 2012

Thnks for rply.. but mostly it is mention in book that is case of absence of cost of good sold net sale will consider for this ratio. if any accouning standard clear this please provide me.

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 12 November 2012

Ther's no accounting standard as such for calculating the Turnover Ratios. However Sales means Sales less Excise duties & any other taxes that are recoverable from taxing authorities.

I dont know how COGS shud be considered for calculating the turnover ratios. As the turnover ratios are based on Sales as per P&L Account.