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

Assigment, taking the role of a consultant, discuss the factors you would c...

taking the role of a consultant, discuss the factors you would consider in selecting a suitable accounting system solutio for a small to medium enterprise. i has to be 1200 q\work

Determine the proprietary ratio and equity ratio, Proprietary ratio/ equit...

Proprietary ratio/ equity ratio  Meaning: the ratio measures a relationship among proprietor's funds and the total assets. Objective: the objective of computing this ra

Credit evaluation, One of the significant elements of credit management is ...

One of the significant elements of credit management is the assessment of the credit risk of the customer.  As assessing risk two kind of errors arise that are as follows. Type

Cost concept, Cost concept . techniques of costing . absorption costing

Cost concept . techniques of costing . absorption costing

Explain variable cost and fixed cost, Explain variable cost and fixed cost ...

Explain variable cost and fixed cost Variable costs: costs that vary almost in the direct proportion to the volume of production are known as variable costs. The examples of

Job costing, Manufacturing cost data for Sassafras Company, which uses a jo...

Manufacturing cost data for Sassafras Company, which uses a job order cost system, are presented below. Indicate the missing amount for each letter. Assume that in all cases manufa

Model construction, Model Construction The success of a simulation exer...

Model Construction The success of a simulation exercise is related to the predictive quality of the underlying model, so that considerable care should be taken with model const

What specifically caused your emotional response?, What story or character ...

What story or character in a story generated what Aristotle calls a "catharsis?" Describe your emotional response. What specifically caused your emotional response?

Cost-price-total revenue and quantity changes, Quasar Computers are the fir...

Quasar Computers are the first all optical notebooks and their profit largely affects the manipulations in cost, price, total revenue and quantity changes. The market analysis show

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