The formulas used in the calculations are:
\[ \text{average current assets} = \frac{\text{opening current assets} + \text{closing current assets}}{2} \]
\[ \text{average current liabilities} = \frac{\text{opening current liabilities} + \text{closing current liabilities}}{2} \]
\[ \text{average working capital} = \text{average current assets} - \text{average current liabilities} \]
\[ \text{working capital turnover} = \frac{\text{revenue}}{\text{average working capital}} \]
This calculator computes the Working Capital Turnover based on the input values of revenue, opening and closing current assets, and opening and closing current liabilities. The Working Capital Turnover Ratio measures how efficiently a company is using its working capital to generate revenue.
Let's assume the following:
Calculate the average current assets:
\[ \text{average current assets} = \frac{3,000,000 + 2,000,000}{2} = 2,500,000 \]
Calculate the average current liabilities:
\[ \text{average current liabilities} = \frac{1,000,000 + 800,000}{2} = 900,000 \]
Calculate the average working capital:
\[ \text{average working capital} = 2,500,000 - 900,000 = 1,600,000 \]
Calculate the working capital turnover:
\[ \text{working capital turnover} = \frac{8,000,000}{1,600,000} = 5 \]
Therefore, the Working Capital Turnover for Company Alpha is 5x.
