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

Case study, Do you think the food industry in general has equivocated on fo...

Do you think the food industry in general has equivocated on food labeling? Are all foods labeled natural in the same way? Has modern society subverted the concept of nature?

PRATICAL PROBLEM, The standard cost of chemical mixture ~ PQ’ is as follows...

The standard cost of chemical mixture ~ PQ’ is as follows: 40% of material P @ Rs. 400 per kg. 60% of material Q @ Rs. 600 per kg. A standard loss of 10% is normally anticipated in

Activity ratio, Accounting ratios that determine a firm's ability to conver...

Accounting ratios that determine a firm's ability to convert various accounts within their balance sheets into sales or cash. Companies will usually try to shift their productio

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

Duffy tol and stamping, What are the objectives of excellence teams and min...

What are the objectives of excellence teams and minicompanies? Did the companies achieve these objectives?estion #Minimum 100 words accepted#

Explain zero base budgeting, Introduction of zero base budgeting Steps ...

Introduction of zero base budgeting Steps involved in the introduction of zero base budgeting 1) Corporate objectives should be established and laid down in detail 2) Dec

Collection float, Collection float considers to the gap among the times, pa...

Collection float considers to the gap among the times, payment is made through the customer/debtor and the time while funds are obtainable for use in the company's bank account. In

Integer programming, Integer Programming It is a technique for solving ...

Integer Programming It is a technique for solving a linear programming model with an added constraint that the decision variables must only be non-negative integers. In the

Cash forecasting and budgeting, A cash budget is one of the main important ...

A cash budget is one of the main important devices to plan and control cash payments and receipts. In preparation of a cash budget the subsequent points are considered. Cred

Incremental analysis, What nonfinancial factors should management consider ...

What nonfinancial factors should management consider in making its decision on whether to accept or reject a special order?

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