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

#title.cost control and cos reduction., what does it mean by improving mate...

what does it mean by improving materials usage in an organization?

Post Cost, What is the correct formula for Post Cost?

What is the correct formula for Post Cost?

Job order costing, Morrow Company applies overhead based on direct labor ho...

Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor h

Traditional and activity based costing, Explain what is meant by traditiona...

Explain what is meant by traditional costing system. Support with example.

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

Basic assumption of transportation model, Basic Assumption of Transportatio...

Basic Assumption of Transportation Model The basic assumption of the model is that the transportation cost on a given route is directly proportional to the number of units tran

Multiple regression, MULTIPLE REGRESSION The least square regression eq...

MULTIPLE REGRESSION The least square regression equation discussed above was based on the assumption that total cost was determined by only one activity based variable. However

Alternative performance measures, Alternative performance measures Ther...

Alternative performance measures There are various measures that can be used to measure performance of a decentralized company. The major ones are: •    Return on Investmen

Strategic positioning, Strategic Positioning The company must identify ...

Strategic Positioning The company must identify its strategic choices. This can be done from the firm’s objectives, which emanates from the firms mission. Strategies have to be

Scorecard, Scorecard The traditional approach to the monitoring organiz...

Scorecard The traditional approach to the monitoring organizational performance has focused on the financial measures and the outcomes. Increasingly, companies are realizing th

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