Breathtaking Working Capital Turnover Ratio Analysis
Working Capital Turnover Ratio is a financial ratio which shows how efficiently a company is utilizing its working capital to generate revenue.
Working capital turnover ratio analysis. Net sales - 1000000 current. Working Capital Turnover Ratio. Working capital turnover ratio is an analytical tool used to calculate the number of net sales generated from investing one dollar of working capital.
Determine Working capital turnover ratio if Current assets is Rs 150000 current liabilities is Rs 100000 and Cost of goods sold is Rs 300000. The following schedule contains the required calculations. The working capital ratio is a very basic metric of liquidity.
Calculate working capital turnover ratio. Candidates are sometimes confused about which profit and capital figures to use. High working capital turnover ratio is an indicator of efficient use of the companys short-term assets and liabilities to support sales.
Now that we know all the values let us calculate the Working capital turnover ratio for both the companies. In this formula working capital refers to the operating capital that a company uses in day-to-day operations. The average working capital during that period was 2 million.
It is meant to indicate how capable a company is of meeting its current financial obligations and is a measure of a companys basic. What is Working Capital Turnover Ratio. A high turnover ratio indicates that management is being extremely efficient in using a firms short-term assets and liabilities to support sales.
Working capital turnover ratio Net Sales Average working capital. A 5 times b 6 times. It is a measure of the ability of a business to use its working capital to support its turnover or revenues.