[amp_mcq option1=”Fixed Assets” option2=”Sales” option3=”Purchases” option4=”Stock” correct=”option2″]<\/p>\n
The correct answer is B. Sales<\/strong>.<\/p>\n Working capital turnover is a measure of how efficiently a company manages its working capital. It is calculated by dividing a company’s net sales by its average working capital. A higher working capital turnover ratio indicates that a company is more efficient at managing its working capital, which can lead to improved profitability.<\/p>\n Working capital is a company’s current assets minus its current liabilities. Current assets are assets that are expected to be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that are due within one year, such as accounts payable and short-term debt.<\/p>\n A company’s working capital is important because it represents the amount of money that the company has available to operate its business. A company needs to have enough working capital to cover its day-to-day expenses, such as payroll and supplies. If a company does not have enough working capital, it may not be able to meet its obligations and may have to go out of business.<\/p>\n Working capital turnover is a useful tool for managers to track the efficiency of their company’s working capital management. A high working capital turnover ratio indicates that a company is efficiently managing its working capital, which can lead to improved profitability. However, it is important to note that a high working capital turnover ratio can also be a sign that a company is not investing enough in its operations. A company needs to strike a balance between efficient working capital management and investing in its operations.<\/p>\n The other options are incorrect because they do not measure the relationship of working capital with sales. Fixed assets are assets that are not expected to be converted into cash within one year, such as land, buildings, and equipment. Purchases are the cost of goods that a company buys to sell. Stock is the inventory that a company has on hand.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Fixed Assets” option2=”Sales” option3=”Purchases” option4=”Stock” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-57084","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n