working capital turnover ratio interpretation

High Working Capital Turnover Ratio indicates the company is very efficiently using the current assets and liabilities to support its sales. It means each dollar invested in working capital has contributed 214 towards total sales revenue.

Working Capital Turnover Formula And Ratio Calculation

Average Working Capital equals working capital at the start of a period plus working capital at the.

. Net Working Capital Turnover Sales Net Current Assets. A fund with 100 turnover ratio means that the average holding period is one year while 300 would mean the average holding period is four months. Interpretation of this ratio should be done when inter-firm or inter-period comparison is being done.

It signifies how well a company is generating its sales concerning the working capital. Significance and Interpretation. The formula to measure the working capital turnover ratio is as follows.

Working Capital Turnover Ratio Formula. 2020 2019 Current Ratio Cash Ratio Quick Ratio Net Working Capital Total Asset Turnover Fixed Asset Turnover Days Sales Outstanding Inventory Turnover Working Capital. WC Turnover Ratio Revenue Average Working Capital Working capital can be calculated by subtracting the.

Working Capital Turnover Ratio Revenue Average Working Capital. An activity ratio calculated as revenue divided by working capital. The working capital turnover ratio shows the companys ability to pay its current liabilities with its current.

Money is moving in and out on a regular basis. The working capital turnover ratio measures how well a company is utilizing its working capital to support a given level of sales. Increasing ratio indicates that working capital is more active.

Therefore it is important to read the. Payables turnover ratio increased from 2019 to 2020 and from 2020 to 2021. The following is an example of calculating and interpreting the working capital turnover ratio of a business.

Average working capital. Working capital is the asset base after taking into account liabilities. Working capital Turnover ratio Net Sales Working Capital And Net Sales Total Sales Sales Return Here Total Sales 500000 Sales Return 80000 Therefore Net Sales.

Working capital is current assets minus. The working capital turnover ratio of Exide company is 214. The working capital turnover ratio of Exide company is 214.

A high working capital turnover ratio indicates that a business is running smoothly and requires little further funding. It means each dollar invested in. At the end of a calendar year XYZ Company has 150000 in.

Generally a working capital ratio of less than one is taken as indicative of potential future liquidity problems while a ratio of 15 to two is interpreted as indicating a. Working capital turnover also known as net sales to working capital is an efficiency ratio used to measure how the company is using its working capital to support a. The reciprocal of the ratio will become 025 that is the reciprocal of 41 is 14.

The companys working capital is the difference between the. 240000 140000 280000 1000002. Working capital turnover is a ratio that measures how efficiently a company is usinWorking capital turnover measures how effective a business is at generating saA higher working capital turnover ratio is better and indicates that a company is ablHowever if working capital turnover rises too high it could suggest tha See more.

Activity Ratios