Turnover and control ratios are the measures of the efficiency of a business, more precisely, of asset utilization. It is apparently the better, the higher the so-called asset turnover ratio is. This variable marks a quick collection of receivables, a heavy use of fixed assets, and a small amount of excess inventory. As for liability turnover ratio, it is appropriate when low, because this means that a business retains its cash for the longest possible while (Bragg, 2021). Overall, turnover ratios can belong to different subcategories depending on what they measure, for instance, accounts receivable, accounts payable, investment, or other. The measurement results indicate what exactly needs to be done to make a business perform better.
Regarding control ratios, they serve to measure and express the deviations of the variances that determine the efficiency of business performance. Thus, their subtype referred to as capacity ratio defines the proportion of the actual and budgeted amounts of working hours. Activity ratio illustrates the relationship between the number of hours and the work produced, which is expressed as a percentage of the budgeted standard hours. Finally, efficiency ratio describes the productivity as well, but presents it as a calculation of the actual hours devoted to producing certain work. Control ratios are helpful in identifying what optimization the work or sales process probably needs.
Reference
Bragg, S. (2021). Turnover ratios. Accounting tools: Accounting CPE courses & books. Web.