GENERAL KNOWLEDGE

Detailed explanation-1: -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.

Detailed explanation-2: -Working capital turnover ratio is the ratio between the net revenue or turnover of a business and its working capital. For instance, if a business’s annual turnover is Rs. 20 lakh and average working capital Rs. 4 lakh, the turnover ratio is 5, i.e. (20, 00, 000/ 4, 00, 000).

Detailed explanation-3: -Working capital is a crucial ingredient to running a small business. It is the money a business has available to spend on its operations after paying off its bills and short-term debts. The working capital turnover ratio measures how efficiently a business uses its working capital to produce sales.

Detailed explanation-4: -The working capital turnover ratio compares a company’s net sales to its net working capital (NWC) in an effort to gauge its operating efficiency. The NWC turnover metric can be a useful tool for evaluating how efficiently a company is utilizing its working capital to produce more revenue.