Lesson: Turnover Ratios

In this lesson, Nick Palazzolo, CPA, makes sense of turnover ratios, also referred to as efficiency ratios, by walking through the concepts of accounts receivable turnover, days sales outstanding, and accounts payable turnover. With a focus on the operational efficiency of managing receivables and payables, Nick highlights the importance of turning sales into cash and effectively handling company liabilities. Throughout the session, he emphasizes the practical approach of 'plug and chug' with the provided formulas to calculate these ratios and shows how to interpret them to assess a company's financial efficiency. Nick assures that understanding and memorizing these formulas can be a straightforward way to score points on the exam, while also gaining a deeper understanding of a company's cash flow management.