Financial Statement Analysis
 Ratio Analysis of Financial Statements (Formula, Types, Excel)
 Ratio Analysis Advantages
 Ratio Analysis
 Liquidity Ratios
 Cash Ratio
 Cash Ratio Formula
 Quick Ratio
 Quick Ratio Formula
 Current Ratio
 Current Ratio Formula
 Acid Test Ratio Formula
 Defensive Interval Ratio
 Working Capital Ratio
 Working Capital Formula
 Net Working Capital Formula
 Changes in Net Working Capital
 Change in Net Working Capital (NWC) Formula
 Cash Flow from Operations Ratio
 Cash Flow Per Share
 Cash Reserve Ratio
 Operating Cycle Formula
 Current Ratio vs Quick Ratio
 Bid Ask Spread
 Liquidity vs Solvency
 Liquidity
 Solvency
 Solvency Ratios
 Equity Ratio
 Capital Adequacy Ratio
 Liquidity Risk
 Altman Z Score
 Turnover Ratios
 Inventory Turnover Ratio
 Accounts Receivable Turnover
 Accounts Receivables Turnover Ratio
 Accounts Payable Turnover Ratio
 Days Inventory Outstanding
 Days in Inventory
 Days Sales Outstanding
 Days Sales Uncollected
 Average Collection Period
 Days Payable Outstanding
 Cash Conversion Cycle
 Cash Conversion Cycle (CCC) Formula
 Fixed Asset Turnover Ratio Formula
 Debtor Days Formula
 Working Capital Turnover Ratio
 Profitability Ratios
 Profitability Ratios Formula
 Common Size Income Statement
 Vertical Analysis of Income Statement
 Profit Margin
 Gross Profit Margin Formula
 Gross Profit Percentage
 Operating Profit Margin Formula
 EBIT Margin Formula
 Operating Income Formula
 Net Profit Margin Formula
 EBIDTA Margin
 Degree of Operating Leverage Formula (DOL)
 NOPAT Formula
 OIBDA
 Earnings Per Share
 Basic EPS
 Diluted EPS
 Basic EPS vs Diluted EPS
 Return on Equity (ROE)
 Return on Capital Employed (ROCE)
 Return on Invested Capital (ROIC)
 Return on Sales
 ROIC Formula (Return on Invested Capital)
 Return on Investment Formula (ROI)
 ROIC vs ROCE
 ROE vs ROA
 CFROI
 Cash on Cash Return
 Return on Total Assets (ROA)
 Return on Average Capital Employed
 Capital employed Employed
 Return on Average Assets (ROAA)
 Return on Average Equity (ROAE)
 Return on Assets Formula
 Return on Equity Formula
 DuPont Formula
 Net Interest Margin Formula
 Earnings Per Share Formula
 Diluted EPS Formula
 Contribution Margin Formula
 Unit Contribution Margin
 Revenue Per Employee Ratio
 Operating Leverage
 EBIT vs EBITDA
 EBITDAR
 Capital Gains Yield
 Tax Equivalent Yield
 LTM Revenue
 Operating Expense Ratio Formula
 Overhead Ratio Formula
 Variable Costing Formula
 Capitalization Rate
 Cap Rate Formula
 Comparative Income Statement
 Capacity Utilization Rate Formula
 Total Expense Ratio Formula
 Markup Percentage Formula
 Efficiency Ratios
 Dividend Ratios
 Debt Ratios
 Debt to Equity Ratio
 Debt Coverage Ratio
 Debt Ratio
 Debt to Asset Ratio Formula
 Coverage Ratio
 Coverage Ratio Formula
 Debt to Income Ratio Formula (DTI)
 Capital Gearing Ratio
 Capitalization Ratio
 Overcapitalization
 Interest Coverage Ratio
 Times Interest Earned Ratio
 Debt Service Coverage Ratio (DSCR)
 DSCR Formula (Debt service coverage ratio)
 Financial Leverage Ratio
 Financial Leverage Formula
 Degree of Financial Leverage Formula
 Net Debt Formula
 Leverage Ratios
 Leverage Ratios Formula
 Operating Leverage vs Financial Leverage
 Current Yield
 Debt Yield Ratio
 Solvency Ratio Formula
Related Courses
What is Working Capital Turnover Ratio?
Working capital turnover ratio formula is a company signifies that how well a company is generating its sales with respect to the working capital of the company. Working capital of a company is the difference between the current assets and current liabilities of a company.
Working Capital Turnover Ratio Formula
The formula for calculating this ratio is by dividing the sales of the company by the working capital of the company.
Interpretation
It signifies that how well a company is generating its sales with respect to the working capital of the company. The two variables to calculate this ratio is sales or turnover and the working capital of a company. Working capital of a company is the difference between the current assets and current liabilities of a company.
Examples of Working Capital Turnover Ratio Formula (with Excel Template)
Let’s see some simple examples for the calculation of the working capital turnover ratio formula to understand it better.
Example#1
Let us try to understand how to calculate the working capital of an arbitrary company, by assuming the variables used to calculate working capital turnover.
Suppose for a company A, the sales for a particular company are $4000.
4.9 (1,067 ratings)
For the calculation of working capital, the denominator is the working capital. Working capital which is current assets minus current liabilities is a balance sheet item that is why it is important to take the average of working capital. Let’s assume that the working capital for the two respective periods is 305 and 295.
So, the following is the calculation of Working Capital Turnover Ratio
Result will be –
Example#2
Let us try to understand how to calculate this ratio of Tata Steel.
For the calculation of working capital, the denominator is the working capital. Working capital which is current assets minus current liabilities is a balance sheet item that is why it is important to take the average of working capital. The working capital for Tata steel for the two respective periods is 2946 and 9036
So, the following is the calculation of Working Capital Turnover Ratio of Tata Steel
Result will be –
The working capital ratio for Tata steel is 19.83
A higher ratio generally signals that the company is generating more revenue with its working capital. When the current assets are higher than the current liabilities than the working capital will be a positive number. If the inventory level is lesser in comparison to the payables than the working capital is low, which is in this case. That makes the working capital ratio very high. It is important to look at working capital ratio across ratio and also in comparison to the industry to make a good analysis of the working capital.
Example#3
Let us try to understand how to calculate the working capital turnover of Hindalco.
Working capital which is current assets minus current liabilities is a balance sheet item that is why it is important to take the average of working capital. The working capital for Hindalco for the two respective periods is 9634 and 9006. The below snapshot depicts the variables used to calculate this ratio.
Result will be –
The working capital ratio for Hindalco is 1.28.
A lower ratio generally signals that the company is not generating more revenue with its working capital. When the current assets are higher than the current liabilities than the working capital will be a positive number. If the inventory level is lower in comparison to the payables than the working capital is high, which is in this case. That makes the working capital very low. It is important to look at working capital ratio across ratio and also in comparison to the industry to make a good analysis of the formula.
Working Capital Turnover Ratio Calculator
You can use these Working Capital Turnover Ratio Formula Calculator
Sales  
Working Capital  
Working Capital Turnover Ratio Formula  
Working Capital Turnover Ratio Formula = 


Relevance and Use
A higher working capital generally signals that the company is generating more revenue with its working capital. When the current assets are higher than the current liabilities than the working capital will be a positive number. It is important to look at all the part that goes into the formula. It’s important to analyze whether the ratio is higher or lower due to a high level of inventory or the management of debtors or credits from whom the company buys raw materials or to whom they sell their finished goods. It is important to look at working capital ratio across ratio and also in comparison to the industry to make a good
You can download this Working Capital Turnover Formula Excel Template here – Working Capital Turnover Ratio Formula Excel Template
Recommended Articles
This has been a guide to what is Working Capital Turnover Ratio? Here we discuss how to calculate Working Capital Turnover Ratio and its formula along with practical examples and downloadable excel sheet. You can learn more about accounting from the following articles –