State the capital turnover ratio, Managerial Accounting

Assignment Help:

Capital turnover ratio

 Meaning: this ratio establishes a relationship among net sales and capital employed.

Objective: the objective of computing this ratio is to verify the efficiency with which the capital employed is utilized.

Components: there are two components of this ratio which are as under:

Net sales

Capital employed

Computation: this ratio is computed by separating the net sales by the capital employed. This ratio is usually expressed as x number of time. In the form of a formula this ratio might be expressed as under.

Capital turnover ratio= net sales/capital employed

Net sales = gross sales-sales return

Capital employed= long term debt + shareholder's fund

Interpretation: it shows the firm's ability to generate sales per rupee of capital employed. The higher the ratio the greater is the dales made per rupee of capital employed in the firm and as higher is the profit. A low capital turnover ratio to low sales generated in relation to capital employed or excessive capital being used in the firm.

 


Related Discussions:- State the capital turnover ratio

Manufacturing cost, what are the different arguments against direct materia...

what are the different arguments against direct materials, direct labor, and factory overhead

Value analysis-material control, Value analysis Is a formalized techniq...

Value analysis Is a formalized technique involving a rigorous analysis of products at the design stage or at any time during the saleable lives, to determine their value charac

Draw a time line for the assembly department, Computing equivalents units a...

Computing equivalents units and assigning costs to completed units and ending work in process; no beginning inventory or cost transferred in (30 -45min) Sue Electronics makes CD

How much was Topaz’s operating income (income before taxes), How much was T...

How much was Topaz’s operating income (income before taxes) last year?

#titleCORPORATE GOVERNANCE, Final paper: CAPM and Capital Structure (2500 w...

Final paper: CAPM and Capital Structure (2500 words max) Reflect on the course materials with specific focus on the last two papers (Sharpe; Modigliani & Miller). Synthesize the k

Collection effort, The collection policy of a firm is intend at timely coll...

The collection policy of a firm is intend at timely collection of overdue amount and comprises of the subsequent. a.      Monitoring the state of debtors (account receivable)

Time series analysis, how do i use least squares method to solve semi avera...

how do i use least squares method to solve semi average problem?

Two jobs during the period, The Work in Process account for Monty's Company...

The Work in Process account for Monty's Company contained the following entries: Work in Process Account Debit of $40,000 for direct raw materials Debit of $60,000 for direct labor

Explain functional classification of ratios, Explain Functional classificat...

Explain Functional classification a)  Liquidity ratio: these are the ratio which measures the short term solvency or financial position of a firm. These ratios are calculati

Accounting , I have two problems due in two hours can you do this for me?

I have two problems due in two hours can you do this for me?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd