![]() The NWC turnover ratio can be interpreted as the dollar amount of sales created for each dollar of working capital owned. How to Interpret Working Capital Turnover Ratio (NWC) ![]() ![]() However, unless the company’s NWC has changed drastically over time, the difference between using the average NWC value compared to the ending balance value is rarely significant. In order to match the time period of the numerator with that of the denominator, using the average NWC balances between the beginning and ending periods is recommended. The sales of a business are reported on its income statement, which tracks activity over a period of time. Working Capital Turnover = Net Sales / Net Working Capital (NWC).The formula for calculating the NWC turnover is as follows. Non-Operating Liabilities → Debt and any interest-bearing securities are also removed because they represent financial liabilities.Non-Operating Assets → Cash and cash equivalents like marketable securities are excluded in the calculation of NWC.current assets minus current liabilities – the net working capital (NWC) is a more practical measure since only operating assets and liabilities are included. While the working capital metric can be used – i.e. “turnover”) must be divided by its net working capital (NWC). In order to calculate the turnover ratio, a company’s net sales (i.e. ![]() The NWC turnover metric can be a useful tool for evaluating how efficiently a company is utilizing its working capital to produce more revenue. The working capital turnover ratio compares a company’s net sales to its net working capital (NWC) in an effort to gauge its operating efficiency. How to Calculate Working Capital Turnover (Step-by-Step) The Working Capital Turnover is a ratio that compares the net sales generated by a company to its net working capital (NWC). ![]()
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