abhishreshthaa
Abhijeet S
TURNOVER RATIO
Turnover ratios indicate the efficiency with which the capital employed is rotated in the business.
The overall profitability of the business depends on two factors:
(i) the rate of return on capital employed; and
(ii) the turnover, i.e., the speed at which the capital employed in the business rotates.
Higher the rate of rotation, the greater will be the profitability.
Here two types of ratios are calculated. They are as under:
1. Capital Turnover Ratio
2. Fixed Assets Turnover Ratio
3. Total Turnover Ratio
Turnover ratios indicate the efficiency with which the capital employed is rotated in the business.
The overall profitability of the business depends on two factors:
(i) the rate of return on capital employed; and
(ii) the turnover, i.e., the speed at which the capital employed in the business rotates.
Higher the rate of rotation, the greater will be the profitability.
Here two types of ratios are calculated. They are as under:
1. Capital Turnover Ratio
2. Fixed Assets Turnover Ratio
3. Total Turnover Ratio