Acct Ch 11
Turnover Formula
Sales / Average Operating Assets
Net operating income is
income before interest and income taxes have been deducted EBIT
throughput time
process time + inspection time + move time + queue time
manufacturing cycle efficiency
value added time(process time) / throughput time
Delivery Cycle Time
wait time + process time + inspection time + move time + queue time or wait time + throughput time
ROI Alternative formula
Margin X turnover
residual income
Net Operating Income - (Average Operating Assets x Minimum Required Rate of Return)
ROI Formula
Net Operating Income / Average Operating Assets
Margin Formula
Net Operating Income / Sales
average operating assets are
cash, accounts receivable, inventory, plant and equipment, and other productive assets.
