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      Question

      Which variable is compared to working capital when

      calculating the working capital turnover ratio?
      A Gross Profit Correct Answer Incorrect Answer
      B Fixed Assets Correct Answer Incorrect Answer
      C Net Sales Correct Answer Incorrect Answer
      D Total Liabilities Correct Answer Incorrect Answer
      E Current Assets Correct Answer Incorrect Answer

      Solution

      The working capital turnover ratio is a financial ratio that measures how efficiently a company is using its working capital to generate sales. It is calculated by dividing net sales by the average working capital over a period of time.   Working capital is the difference between a company's current assets and current liabilities. Current assets include things like cash, accounts receivable, and inventory, while current liabilities include things like accounts payable and short-term debt.

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