Working capital turnover is a measure to define how well the company has made an investment in the company’s working capital for funding the daily operations and sales. Generally, a higher ratio is better and suggests that the company does not require more funds. Similarly, a lower ratio depicts poor management of short-term funds. But an extremely higher ratio may also have drawbacks attached to it.
For calculating the working capital turnover ratio, we divide net sales by working capital. The formula is as follows:
| Working Capital Turnover Ratio = Net Sales / Working Capital |
Working Capital Turnover Calculator
How to Calculate Using the Calculator?
For calculating the working capital turnover ratio using this calculator, you are required the following variables only.
- Net Sales – The figure of net sales can be obtained from the statement of income and expenditure. Net sales mean the sum total of sales less sales return, discounts, etc., during the period.
- Working Capital – Working capital means monetary resources to fund the daily functioning of the company. It is the difference between the current assets and current liabilities of the company.
