Lesson 03 — Asset Turnover & Efficiency Ratios
Week 08 · Lesson 3 of 3 · Week 08 — Key Ratios Part 2: Leverage & Efficiency
Back to beginner course
Asset Turnover = Revenue / Total Assets How much revenue the company generates per rupee of assets deployed. | Sector | Typical Turnover | ||| | FMCG | 1.5–2...
Asset Turnover
Asset Turnover = Revenue / Total Assets
How much revenue the company generates per rupee of assets deployed.
| Sector | Typical Turnover |
|---|---|
| FMCG | 1.5–2.5× (asset-light, high churn) |
| IT Services | 1.0–1.5× |
| Infra/Power | 0.2–0.5× (asset-heavy) |
Receivable Days (Debtor Days)
Receivable Days = (Trade Receivables / Revenue) × 365
How long customers take to pay.
- FMCG: 15–30 days (fast cash)
- Infra: 90–180 days (government projects — slow payers)
Inventory Days
Inventory Days = (Inventories / COGS) × 365
How long goods sit in storage before being sold.
- Retail: 20–40 days
- Real estate: 365+ days (long project cycles)
Cash Conversion Cycle
CCC = Inventory Days + Receivable Days − Payable Days
Lower CCC = company converts operations to cash faster.
Connect to the screener
You can use InvestingSamjho's screener to filter for companies with asset turnover above a threshold.
Key takeaway
Efficiency ratios tell you how well management uses the company's resources. High turnover + low CCC = well-run operations.