## Working capital turnover rate

Working capital is the asset base after taking into account liabilities. The working capital turnover ratio shows the company's ability to pay its current liabilities with

The working capital turnover ratio is calculated by dividing net annual sales by the average amount of working capital—current assets minus current liabilities—during the same 12-month period. For example, Company A has \$12 million of net sales over the past 12 months. Therefore, its working capital turnover ratio was: net sales of \$2,400,000 divided by average working capital of \$400,000 = 6 times during the year. As with most financial ratios, you should compare the working capital turnover ratio to other companies in the same industry and to the same company's past and planned working capital turnover ratios. Working Capital Turnover Example ABC Company has \$12,000,000 of net sales over the past twelve months, and average working capital during that period of \$2,000,000. The calculation of its working capital turnover ratio is: Working Capital Turnover Ratio Formula It signifies that how well a company is generating its sales with respect to the working capital of the company. Working capital of a company is the difference between the current assets and current liabilities of a company.

## Working Capital Turnover Ratio Working Capital Turnover Ratio is used to determine the relationship between net sales and working capital of a business. It shows the number of net sales generated for every single unit of working capital employed in the business. Companies may perform different types of analysis such as trend analysis, cross-sectional analysis, etc. to find …

Working capital turnover ratio establishes relationship between cost of sales and net working capital. As working capital has direct and close relationship with  The working capital ratio, also called the current ratio, is a liquidity equation that calculates a firm's ability to pay off its current liabilities with current assets. If you know your company's inventory turnover ratio, you can quickly calculate the The net working capital turnover ratio is an asset management ratio that is a  27 Nov 2019 Working Capital Turnover Ratio. This ratio measures the efficiency of the firm in utilizing its Working Capital. A high ratio represents efficient

### Find out how to calculate your working capital ratio and to use it to keep your business healthy.

Generally, a working capital ratio of less than one is taken as indicative of potential future liquidity problems, while a ratio of 1.5 to two is interpreted as indicating a company on solid

### 31 Jan 2017 The CFMA survey includes a category for working capital turnover. This ratio is a product of total revenues divided by working capital (the net of

The working capital turnover ratio denotes a company's effectiveness in utilizing its capital. It is calculated as the net revenue earned from all the operations of an   Working capital is the asset base after taking into account liabilities. The working capital turnover ratio shows the company's ability to pay its current liabilities with

## 23 Apr 2015 Working Capital Turnover Ratio This ratio indicates the number of times the working capital is turned over in the course of the year. Measures

On the whole, a high ratio grants the ability to run your firm's operations without difficulties and extra funding. Working Capital Turnover Definition, Formula,  Net Working Capital Turnover ratio, is the turnover divided by the net current assets (or net turnover / average (current assets,other + stocks + debtors + cash  Working Capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned  Working capital (abbreviated WC) is a financial metric which represents operating liquidity The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; return on equity (ROE) shows  4.6.3 LIQUID RATIO. 4.6.4 WORKING CAPITAL TURNOVER RATIO. 4.6.5 STOCK TURNOVER RATIO OR INVENTORY. TURNOVER RATIO. 4.6.6 DEBTORS