![]() ![]() Hence, the working capital turnover for Company Alpha is $8,000,000 / $1,600,000 = 5x. Working capital turnover = revenue / average working capital This is the final step - calculating the working capital turnover using the working capital turnover formula shown below: Thus, in our example, the average working capital for Company Alpha is equal to $2,500,000 - $900,000 = $1,600,000. The next step is to calculate the average working capital using the formula below:Īverage working capital = average current assets - average current liabilities We can calculate these using the following formulae:Īverage current assets = (starting current assets + closing current assets) / 2Īverage current liabilities = (starting current liabilities + closing current liabilities) / 2 Next, we need to calculate the average current assets and the average current liabilities.
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