Working Capital Turnover Ratio Calculator
Measure how efficiently a company generates revenue from its working capital
Calculate Working Capital Turnover Ratio
Total revenue generated by the company during the period
Current Assets
Current Liabilities
Working Capital Turnover Results
Formula: Working Capital Turnover = Revenue ÷ Average Working Capital
Calculation: $0 ÷ $0 = 0.00x
Average WC: ($0 + $0) ÷ 2 - ($0 + $0) ÷ 2
Efficiency Assessment
Enter values to calculate
Example: Company Alpha
Financial Data
Revenue: $8,000,000
Opening Current Assets: $3,000,000
Closing Current Assets: $2,000,000
Opening Current Liabilities: $1,000,000
Closing Current Liabilities: $800,000
Calculation Steps
Avg Current Assets: $2,500,000
Avg Current Liabilities: $900,000
Avg Working Capital: $1,600,000
Turnover Ratio: 5.0x
Key Insights
Efficiency Measure
Shows how well a company generates revenue from working capital
Higher is Better
Higher ratios indicate more efficient working capital usage
Industry Context
Compare with industry peers for meaningful analysis
Efficiency Benchmarks
< 2x: Low efficiency
2-5x: Moderate efficiency
5-10x: High efficiency
> 10x: Very high efficiency
Understanding Working Capital Turnover Ratio
What is Working Capital Turnover Ratio?
The working capital turnover ratio measures how efficiently a company uses its working capital to generate revenue. It shows how many dollars of revenue a company can generate for each dollar of working capital invested in the business.
Why is it Important?
- •Measures operational efficiency and working capital management
- •Indicates how well management utilizes company resources
- •Helps identify potential cash flow and liquidity issues
- •Enables comparison with industry competitors
Formula Components
Working Capital Turnover = Revenue ÷ Average Working Capital
Average Working Capital = Average Current Assets - Average Current Liabilities
- Revenue: Total sales generated during the period
- Average Current Assets: Mean of opening and closing current assets
- Average Current Liabilities: Mean of opening and closing current liabilities
- Working Capital: Net current assets available for operations
Interpretation Guidelines
- •High Ratio: Efficient working capital management, strong operational performance
- •Low Ratio: Possible excess working capital or inefficient operations
- •Very High Ratio: May indicate working capital constraints limiting growth
- •Negative Ratio: Negative working capital, potential liquidity concerns
Analysis Tips
- •Industry Comparison: Compare with industry averages and competitors
- •Trend Analysis: Monitor changes over multiple periods
- •Seasonal Factors: Consider business seasonality and cycles
- •Growth Context: Fast-growing companies may have different optimal ratios
- •Balance Analysis: Consider alongside other liquidity and efficiency ratios