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    Question

    What does the Working Capital Turnover Ratio measure?

    A The ratio between fixed assets and current liabilities Correct Answer Incorrect Answer
    B The ratio between net revenue and working capital Correct Answer Incorrect Answer
    C The ratio between net income and total assets Correct Answer Incorrect Answer
    D The ratio between inventory turnover and accounts payable Correct Answer Incorrect Answer
    E The ratio between long-term debt and equity Correct Answer Incorrect Answer

    Solution

    Working capital turnover ratio is the ratio between the net revenue or turnover of a business and its working capital. For instance, if a business's annual turnover is Rs. 20 lakh and average working capital Rs. 4 lakh, the turnover ratio is 5, i.e. (20,00,000/ 4,00,000).

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