Working Capital Turnover Ratio is:
AWorking Capital / Total Assets
BWorking Capital / Sales
CSales / Current Liabilities
DSales / Working Capital
Answer & Solution
Correct answer: D. Sales / Working Capital
1. Working Capital Turnover = Sales (or COGS) / Working Capital.
2. Measures effectiveness of using working capital to generate sales.
3. A very high ratio may signal under-investment in working capital.
_Source: ICAI BoS CA Inter Paper 6A, Ch 3 "Financial Analysis and Planning — Ratio Analysis", §3.3(e)_
Related questions
Total Assets ₹50 lakh; Sales ₹2 crore. Total Assets Turnover Ratio is:A high Fixed Assets Turnover Ratio could indicate:Credit Sales ₹36,00,000; Average Receivables ₹6,00,000. Receivables Turnover Ratio is:Average Collection Period equals:COGS ₹12,00,000; Opening inventory ₹1,50,000; Closing inventory ₹2,50,000. Inventory TurnoInventory Turnover Ratio is: