ASSET TURNOVER RATIO Definition

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ASSET TURNOVER RATIO is a general measure of a firms ability to generate sales in relation to total assets. It should be used only to compare firms within specific industry groups and in conjunction with other operating ratios to determine the effective employment of assets. Formula: REVENUE/ASSETS.

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BILLS PAYABLE, in merchant accounts, are all bills which have been accepted, and promissory notes which have been made, are called "bills payable," and are entered in a ledger account under that name, and recorded in a book bearing the same title.

SAFETY STOCK (SS) or security stock ensures that the item is available up to the pre-defined required service level, even when the re-ordered material arrives later then expected, or the fluctuations in demand during the lead-time cause the demand to be larger then expected. See also STOCK RESERVE.

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