Interpretation: Stock velocity indicates the firm's efficiency and profitability. The stock turnover ratio shows that on an average inventory balances are cleared once in 3 months. Since there is no standard for this ratio, the period of operating cycle of this firm is to be compared with the industry average for better interpretation. Illustration 9: Comment on the performance of arasu limited from the ratios given below: Industry average Ratios of Ratios Arasu ltd. 1. Current ratio 2:1 2.5:1 2. Debt-equity ratio 2:1 1:1 3. Stock turnover ratio 9.5 3.5 4. Net profit margin ratio 23.5% 15.1%