![]() ![]() If the ratio is high, it shows that the company efficiently utilizes the amount of capital invested. ![]() cash conversion cycle improved from 2020 to 2021 and from 2021 to 2022. Capital turnover (also called equity turnover) is a measure that calculates how efficiently the company is managing the capital invested by the shareholders in the company to generate revenues. The operating asset turnover ratio is an efficiency ratio that identifies the revenue generation capabilities of a company’s operating assets. Its used to gauge how well a company is utilizing its working capital to generate sales. number of days of payables outstanding decreased from 2020 to 2021 and from 2021 to 2022.Ī financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations equal to average inventory processing period plus average receivables collection period minus average payables payment period.Ĭhevron Corp. The working capital turnover ratio shows the connection between the money used to finance business operations and the revenue a business earns as a result. The working capital turnover ratio is an efficiency and activity ratio. Working Capital is calculated by subtracting total liabilities for total assets. operating cycle improved from 2020 to 2021 and from 2021 to 2022.Īn estimate of the average number of days it takes a company to pay its suppliers equal to the number of days in the period divided by payables turnover ratio for the period.Ĭhevron Corp. The Working Capital Turnover Ratio is calculated by dividing the company’s net annual sales by its average working capital. number of days of receivables outstanding improved from 2020 to 2021 and from 2021 to 2022.Įqual to average inventory processing period plus average receivables collection period.Ĭhevron Corp. number of days of inventory outstanding improved from 2020 to 2021 and from 2021 to 2022.Īn activity ratio equal to the number of days in the period divided by receivables turnover.Ĭhevron Corp. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.Ĭhevron Corp. Working Capital Turnover Ratio Net Annual Sales / (Total Assets Total Liabilities) Working Capital Turnover Ratio Examples To bring context and to see why this metric is so important for measuring business efficiency, let’s take a look at a few examples.
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