Efficiency Ratios

Efficiency Ratios The efficiency ratio is an indicant of how well Johnson and Johnson (J&J) is run on an organisational wide basis. Efficiency ratios are withal defined as addition turnover rate ratios (Finkler, Kovner & Jones, 2007). The asset turnover ratio measures how amentiferous J&J is in managing entirely of its assets to generate Sales. This efficiency ratio is metric by dividing sales by derive assets by total taxation. For year 2010, J&J had an asset turnover of 0. 6.comparability J&Js asset ratio to the industry, it is the same (Key pecuniary Ratios Financial Results Johnson & Johnson,2011). Thus J&J is as businesslike in the use of its assets as its healthcare competitors in the industry. Revenue to assets = chalk up revenue chalk up assets Total revenue $61,587. 0= 0. 598 or 0. 6 Asset turnover Total assets $102,908. 0 The years receivables ratio is calculated by dividing the accounts receivable by the revenue per daytime.The age receivables willing indic ate how long, on average, it takes for J&J to collect on its sales to customers on credit. This ratio is also known as the average accruement period (ACP). The shorter the collection period, the sooner the organization can compensation bills or invest to earn by-line (Finkler, Kovner & Jones, 2007). A short ACP is more efficient for the organization. J&J had an ACP of 58 days in 2010. This is a slight development from previous years ACP of 57 days.Revenue per day = Total revenue 365$61,857. 0 = $168. 731 365 days Days receivable = Accounts receivable Revenue per day AR $9774. 0 = 57. 92 days DR $168. 731/day Reference Key fiscal ratios financial results johnson & johnson . (2011). Retrieved from http//moneycentral. msn. com/investor/invsub/results/compare. asp? Page=ManagementEfficiency& sign=JNJ