Live data
MSFT — ROE, Operating Margin. Open MSFT on the Ledge to see current values.
Compare
| Ratio | Formula | Interpretation |
|---|---|---|
| Asset Turnover | Revenue / Total Assets | How many dollars of sales per dollar of assets |
| Inventory Turnover | COGS / Average Inventory | How quickly inventory sells (higher = faster) |
| Days Sales Outstanding | Receivables / (Revenue / 365) | Average days to collect payment |
| Cash Conversion Cycle | DSI + DSO - DPO | Days between paying suppliers and collecting from customers |
Key point
A shorter cash conversion cycle means the company gets paid faster than it pays suppliers. That is free financing from the business model itself.
Try it
Compare two companies in the same sector using the **Compare** feature. Look at asset turnover and inventory metrics. Better efficiency often predicts outperformance.
Check-in
Company A turns over inventory 12 times per year. Company B turns it over 4 times. Which manages inventory better?
Key insight
Check your understanding
Sit with the ideas.
Walmart has asset turnover of 2.5x and inventory turnover of 8.5x. A luxury retailer has asset turnover of 0.8x and inventory turnover of 2.0x. Why the difference?
Why: