FINANCIAL RATIO Definition

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FINANCIAL RATIO is the result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.

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LABOR THROUGHPUT VARIANCE reveals potential constraints on throughput caused by changes in the mix of products being produced. It is computed the way the traditional labor "efficiency" variance is computed but aggregated at a fairly high level (e.g., total plant or total department) and expressed as percent of actual clocked production hours vs. standard production hours.

EARNING QUALITY is best determined through the inverse relationship between the amount of time elapsed between revenue recognition and cash collection.

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