Working Capital Turnover Ratio is used to determine the relationship between net sales (Total Sale – Sale Return) and working capital of a business. It shows the number of net sales generated for every single unit of working capital employed in the business.
Gross Working Capital = Total Current Asset
Net Working capital is calculated by subtracting current liabilities from current assets
Formula of Working Capital Turnover Ratio
Working Capital Turnover Ratio = Net Sale/Net Working Capital
Net Sale = Total Sale – Sale Return
Net Working Capital = Current Asset – Current Liabilities
Example of how to calculate working capital turnover ratio
