Every business has its own core activities which are referred to as the Operating Activities.
Operating Income or Operating Profit refers to the profit that a business has after paying for all its Operating Expenses that include raw material costs, employee costs and all other operating bills. It is the amount available to cover the Interest & Tax obligations of the business. The Operating Profit when divided by the Revenue from Operating Activities gives us Operating Margin or Operating Profit Margin. It is a type of Profitability Ratio which implies how much a company earns as profit for every rupee of its sales.
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Every business invests in several assets to earn income. These may include fixed assets which include immovable property and machinery or current assets which include inventory and other working capital requirements.
Asset Turnover Ratio determines how effectively a business is deploying its assets to generate revenue. In financial terms, Asset Turnover ratio is defined as the ratio of Net Revenue of the company to its Total assets (which comprises of both Fixed as well as Current assets).
Thus, Asset Turnover Ratio = Net Sales / Total Assets
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Your credit score reflects your credit habits to your bankers and therefore it is indeed important for you to be concerned about your credit score. As such, people are now getting aware of the importance to review their credit reports regularly. Even the regulator, SEBI, has acknowledged the need to regularly monitor the credit reports and thereby calls for one free report on an annual basis by the credit information bureaus. Reviewing your credit report indeed helps your diagnose your credit health. While your repayment record largely impacts your credit score, there are other matters impacting your credit score too.
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Your credit score is the first thing your bank will check before judging you on other parameters like your salary, other loan obligations, your repayment capacity etc. So, a higher Credit Score should ideally help you get a loan at more favorable terms.
Recently, one of the leading public sector banks has linked the rate of interest to the credit score. Customers having a credit score higher than 760 will be charged 8.35%, those in the range of 725 to 759 points will be charged 8.85% while those having credit score below 724 points will be charged 9.35% on home loans. This spread of 1.00% indeed asks for a regular monitoring of your credit score and immediate corrective action in case of any misinformation stated therein. Other banks are also likely to follow in taking such a step.
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