Activity Ratio

A measure of the efficiency or effectiveness with which the business manages its resources or assets. This measure indicates the speed with which Net Operating Assets (Equity + Debt) are converted or turned into sales. This can be improved by optimizing balance sheet efficiency, i.e., by reducing the investment in working capital, selling-off any unused assets, or by seeking ways to maximize the use of assets. In the example below, the child care business activity ratio exceeded the target of 2 times for the period.