 Let us have the efficiency ratios. Here we have stock turnover or inventory turnover. Stock turnover is cost of goods sold divided by the average inventor. Simply means how quickly your inventory is sold out. If in a single trading business it is that way. But if it is a manufacturing business then you need raw material, working process and finished goods. So here is the finished goods. But if you have those two also so you need to work out for each of them separately, raw material inventory, working process inventory rate and finished good inventory rate. But in case here we assume that there is one single inventory. Now net sales divided by average inventory or number of units sold is the merriest waste. But generally it is like this cost of goods sold divided by average inventory. What do you mean by average here? Average means that you take the opening stocks in the beginning and the closing stock at the end of the year. Take it together divided by two. Simple average. But some people are of the opinion a simple average is not right. If there is a seasonal business then you have to come up with a different weighted average as a simple average. Stock turnover can be computed by employing any of the above formula. The first formula is considered to be the more reasonable and that is what is being used actually. The second formula can be used when cost of goods sold is not known as such but the numbers are there. The third formula is used to eliminate the effect of changing prices. Average stocks is opening stock plus closing stock divided by two. Now this is inventory turnover rate. But if you want to find out the age of inventory so then you have to go ahead. A high stock turnover ratio indicate efficient management of inventory because more quickly more frequently these stocks are sold out. The lesser amount of money is required to finance the inventory. Inventory may finance as soon as you can sell it out. A low inventory indicates an inefficient management of inventory. A low inventory turnover employs over investment in inventories, dull businesses, low sales, poor quality goods, stock accumulation and accumulation of absolute and slow moving goods and low profit as compared to total investment. Basically, if you go into the detail of inventory there are a lot of things. We have read about the inventory which has not been sold for the past two years but we are bringing it to the inventory which is still there so you have to be very careful. Acceptable normally there is no specific criteria higher the ratio better it is for the company. Now debtors turnover rate ratio or receivable turnover. Debtors turnover ratio net credit sales not the total sales credit sales only because receivable is out of credit sales and again average trade receivable account receivable trade receivable same so total receivable Sunday debtors plus bills receivables notes receivable whatever amount committed by the other parties to pay you during that particular year that is your trade receivables importance. Debtors turnover ratio indicates the number of times the debtors are done over during a year but as soon as you collect it is better and today's problem is that collection is the main problem that you sell goods but you have to wait for money to come. The higher the rate of debtors turnover the more efficient is the management debtors of more liquid are debtors similarly low debtors turnover implies inefficient management of debtors. Basically in financial management these two items inventory and receivable we have the whole chapters how to manage these two things. Acceptable criteria there is no rule and some ke kitni oni chahi kitna hona chahi time jpn karte hain aapne creator apne customers ko kitna time allow kiya ho hain credit ka asa nahi ke open dedi hai toh dekh nahi hai ke hain hain agar tiz din ka allow kiya hain toh humara turnover rate kitni din ka ban raha hai toh accordingly hain me usko manage karna. Debtor turnover ratio indicates the debt have many times debtors as converted into cash during a given year it reflects the credit sale policy of the company. Average collection period jay se hum average inventory ka period calculate kar sakte ke kitni dino mein maari inventory jaya bahar nikal jaati hai. Isi tarahan debtors ka bhi dekhne time frame. Ke kitni din mein hum apna payasa collect karte hain. Toh formula same hi hai dekhne debtors hai aur usko net sales divide kare aur number of days in a year se multiply karte. Isme kuch roga opinion hi hai ke working days le. Not necessarily aap number of days in a year jay usi ko lele. The average collection period ratio represents the average number of days for which a firm has to wait before its debtors are converted into cash. The ratio may use the quality of debtors. A short collection period implies prompt payment by the debtors. It reduce the chances of bad debts. On the other hand a high collection period ratio implies too liberal and inefficient credit collection performance. Basically what we do in business, we have credit policies. Sometime we have a tight credit policies, sometime we have relaxed policies. Agar maal bhi ki nahi raha hai toh phir aap tiz din ki bhi jaya charlis din ka credit bhi dekh sakte. Dekhne agar aap amal se, dekhne se bhi kraha hai toh aap apni policy ko tight bhi kr sakte. Dekhne normally ek average policy leke chalna patata hai. Creditors turnover ratio payable turnover ratio. Just like for debtors we see how many days we have collected, similarly we see payable. We see how many days we have paid. Because this is again an area that we should delay our creditors. No. If you have made a time frame with them, make sure that you should pay in that particular time. If you are taking more time, ultimately aap hi ko nuksaan ho jayega kyunke aap phir aap ko next time maal mein koi gharbar karke denge. Quality ne denge phir. Isli zeroori hai ke jaha aap debtors ko chase kar rahe hain, aap apni creditors ka bhi take care karein. Balki aap toh policies bnadi hain ke ji good payment policies. Ya chhi kambkya ho hain jo timely pay off karthi hain apni creditors ko. So the ratio indicates the credit period enjoyed by the firm in paying creditors or important ratio efficiency ki fixed assets turnover ratio. Yani hain apni fixed assets jay use kar rahe hain, non-current assets jay use kar rahe hain, property, plant and equipment et cetera. Uske itna payasai invest kya usse turnover kitni hain. Sales per rupee of investment kya hain hain. That is also very important. Yuki agar aap zyada share turn out kar rahe hain, niche paise kaum hain toh ye bhi ghalat hain. Yuki isko kate hain overtrading. Kyaise ke ji aap invest to kar nahi rahe hain, machinery ko chila rahe hain aur hota ye ka breakdown ho jaati hain aur phir business bhand ho jaati hain. To aap ye deke ke aap machine jo already hain usne improvement lain, uske nahi jazain ki lain, jo bhi kurshich karein ke usko improve karein. Take aap ki inventory, your fixed asset turnover kya rahe hain, ye betar ho jaati hain. Dake isme kya aap cost of sales? Isme sales nahi lethe, isme kya sales ki baat jo aap toh marketing kar kaum hain. Yaha production ki baat hain. Kost jo bnare hain, jo goods bhan rahe hain unki cost aur usko net assets se, net fixed assets se divide karein. Non-current assets kalein or fixed assets kalein. The ratio may use the efficiency and profit earning capacity of the concern. Higher the ratio is, greater is intensive utilization of fixed assets. Dake aap machine laa ke rahe hain, agar uska issamaal nahi kar rahe hain, toh cost toh parveena aapko. Issame aap ke tamam jo fixed assets hain, wo utilize hone chahi, unsek generate hone chahi ye sales. Lower ratio means underutilization of fixed assets, avoid over trading and under trading. Yaha under capitalization and over capitalizing. Yaha doh wo explain karne ki zharut hain mein. Over trading ka matlab yaha hain ke aap sore se machinery se zyada output lehne ki koshikar hain. Toh ye ghalad hojayaega, ye aapka over trading me chala jayaega. Aur agar aap kaap machine se kaam nahi leh rahe hain, toh isme kya ke aapki investment toh hogi, toh ye aapki under trading hojayaegi. Solvency ratios on long term financial position ratios, debt is cheaper than equity. Ye ek word hain jo samaj na chahi. Normali kate jee ke debt jo hain, wo toh uspe to interest peh karna patta hain. Share orders ko toh dey hain na dey humari marzee. Nahi. Debt cheap is taran se hain ke debt per jo interest diya jata hain uspe teks ki chute milti. Nekin jo dividend diya jata hain ho profit sharing hain. Aur usually ye ek long term equipment hain jab aap share issue karte hain. Debt ke ye aap yuk paise hain hain hain kate kate hain hain, khatam hojayaegi baat. Toh isni ye bahon zurni hain ke debt aur equity ko manage karna hain. Debt is cheaper than the equity. Solvency is a company's long term viability and ability to pay long term obligations. We are make sure ye hain marzee long term obligations hain. Share orders ko dividend bhi mil na chahi. Unke share ma growth bhi uni chahi. Aur your lenders hain, unka aur interest bhi timely pay ho na chahi. Thank you very much.