Working Capital Turnover Ratio
Working Capital Turnover Ratio is the Total revenue of a company divided by average working capital over the past 2 financial years. It measures how efficiently a company is using its working capital to support sales and growth. Also known as net sales to working capital, working capital turnover measures the relationship between the funds used to finance a company’s operations and the revenues a company generates to continue operations and turn a profit.
A higher working capital turnover ratio is better and indicates that a company is able to generate a larger amount of sales. However, if working capital turnover rises too high, it could suggest that a company needs to raise additional capital to support future growth.