📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    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.

    Practice Next
    More Financial Management Questions

    Relevant for Exams:

    ask-question