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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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