State the working capital turnover ratio, Managerial Accounting

Assignment Help:

State the Working capital turnover ratio

 Meaning: this ratio establishes a relation ship among net sales and working capital.

Working capital turnover ratio shows the velocity of the utilization of net working capital. This ratio shows the number of times the working capital is turnover in the course of a year. This ratio calculates the efficiency with which the working capital is being used by a firm.

The components of this ratio are as under:

Net sales

Working capital

Computation: this ratio is computed by dividing the net sales by the working capital. This ratio is usually expressed as x number of times. In the form of a formula this ratio may be expressed as under:

Working capital turnover ratio=net sales /working capital

Net sales= gross sales -sales return

Interpretation: it shows the firm ability to generate sales per rupee of working capital. In general higher the ratio the more able the management and utilization of working capital and vice versa.

 


Related Discussions:- State the working capital turnover ratio

Features of a queue, Features of a queue A calling population – ref...

Features of a queue A calling population – refers to the number of potential customers. This number may be considered finite or infinite. An infinite calling population is

Cost classification, identify and explain cost classification for performan...

identify and explain cost classification for performance evaluation

Illustration of coefficient of determination , Illustration of Coefficient ...

Illustration of Coefficient of Determination The production manager of XYZ Company is concerned about the apparent fluctuation in efficiency and wants to determine how labour c

Jit purchasing-jit aims, JIT purchasing On the other hand is a purchasi...

JIT purchasing On the other hand is a purchasing system in which material purchased are contracted so as that the receipt and usage of materials to the maximum extent possible,

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

Explain quality control and total quality control, Explain Quality control ...

Explain Quality control and Total quality control Quality control (QC) circles can be viewed as a group oriented suggestion system for making improvements. QC circle is a sm

Variables, Variables Unrestricted variable Yi can be expressed in terms...

Variables Unrestricted variable Yi can be expressed in terms of two non-negative variables by using the substitution: Yi = Yi' - Yi'', Yi', Yi'' ≥ 0 The substitution

Job order costing, a cost-allocation base may be any of the following excep...

a cost-allocation base may be any of the following except: a. cost driver b. cost pool c. way to link indirect cost to a cost object d. nonfinancial quantity

Just-in time inventory management-jit production , Just-in Time (JIT) Inven...

Just-in Time (JIT) Inventory management JIT is a system whose purpose is to generate or to purchase products or components as they are required by customers or for use rather

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