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For Immediate Release
Chicago, IL – July 19, 2021 – Stocks in this week’s article are NIKE, Inc. NKE, The Buckle, Inc. BKE and DISH Network Corp. DISH.
3 Top-Rated Efficient Stocks to Boost Portfolio Returns
A company with a favorable efficiency level is expected to provide stellar returns as it is believed to be positively correlated with price performance. After all, efficiency level, which measures a company’s capability to transform available input into output, is often considered an important parameter for gauging a company’s potential to make profits.
However, at times it becomes difficult to measure the efficiency level of a company. This is the reason why one must consider popular efficiency ratios while selecting stocks. These efficiency ratios are:
Inventory Turnover: The ratio of 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which resulted in excess inventory.
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or “debtor’s turnover ratio” is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company’s capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1762723/3-top-rated-efficient-stocks-to-boost-portfolio-returns
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NIKE, Inc. (NKE) : Free Stock Analysis Report
DISH Network Corporation (DISH) : Free Stock Analysis Report
Buckle, Inc. The (BKE) : Free Stock Analysis Report
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