Now, let us look at the formula and understand the ratio better. This ratio helps in understanding how many times a company was able to turn over its working capital during the year. Working Capital refers to the money required by the company for its day-to-day operations.įor example, the money required to pay for raw materials, monthly salary/wages etc.įormula for Working Capital is Current Assets- Current Liabilities Working capital turnover ratio basically means how efficient is the company in generating the Revenue with its given Working Capital. Similar to other turnover ratios like the Asset turnover ratio or Inventory turnover ratio, this ratio helps in understanding the efficiency of the company. What is the Working capital turnover ratio?Īmong many other turnover ratios, one of the most important ratio is the Working Capital Turnover Ratio.
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