Efficiency Ratios

Efficiency Ratios The efficiency dimension is an indicator of how well Johnson and Johnson (J&J) is agree on an organizational wide basis. Efficiency ratios are also delimitate as asset turnover ratios (Finkler, Kovner & Jones, 2007). The asset turnover ratio measures how full-bodied J&J is in managing all of its assets to generate Sales. This efficiency ratio is calculated by dividing gross revenue by rack up assets by total tax. For year 2010, J&J had an asset turnover of 0. 6.Comparing J&Js asset ratio to the industry, it is the same (Key pecuniary Ratios Financial Results Johnson & Johnson,2011). Thus J&J is as efficient in the white plague of its assets as its healthcare competitors in the industry. Revenue to assets = Total revenueTotal assets Total revenue $61,587. 0= 0. 598 or 0. 6 Asset turnover Total assets $102,908. 0 The mean solar days dues ratio is calculated by dividing the accounts receivable by the revenue per day.The days receivables result indicate ho w 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 sight period (ACP). The shorter the collection period, the sooner the organization can pay bills or invest to earn interest (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 brush aside increase 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 financial ratios financial results johnson & johnson . (2011). Retrieved from http//moneycentral. msn. com/investor/invsub/results/compare. asp? varlet=ManagementEfficiency&symbol=JNJ