Choose a ratio and discuss its strategic use by the manager

Management Efficiency are Ratios Financial ratios which are a primary driver of a stock's quality. That being said, it is important to understand exactly what these ratios are telling the investor:

•Revenue per Employee - The revenue per employee ratio is calculated by taking revenues and dividing them by the total employees of a company. The revenue per employee ratio gives us a feel for the labor intensity of a business.

•Receivables Turnover Ratio - The receivables turnover ratio tells us how many times accounts receivable have been collected in a given accounting period. Receivables turnover is calculated by taking the last 12 months of sales and dividing by the average receivables from the latest two quarters.

•Inventory Turnover Ratio - The inventory turnover ratio is determined by taking the cost of sales for the latest 12 months and dividing by the company's average inventory. The resulting inventory turnover ratio tells us how fast the company's products are moving on the marketplace. For the inventory turnover ratio, a higher number is better.

•Assets Turnover - The ratio of sales to assets, or asset turnover ratio, tells us about the capital-intensity of a business, and how well it uses assets to produce revenue. Companies that require a large infrastructure in order to produce, or deliver their product, such as electric utilities, require a large asset base to generate sales.