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Capital Turnover Ratio
A measurement comparing the depletion of working capital to the ability of the company to generate sales over a given period of time. This provides some useful information as to how effectively a company is using its working capital to generate sales.
Working Capital Turnover Ratio equals Annual Sales divided by Net Worth or more precisely divided by Average Net Worth. This ratio indicates the extent to which a customer or company is able to increase sales without the need for additional capital investment.
© 2011. Michael C. Dennis. All Rights Reserved.