When a firm wishes to increase its net working capital turnover rate, it should _____, all else constant.
A) increase its current assets
B) increase its total assets
C) decrease its current liabilities
D) decrease its total liabilities
E) increase its sales

Question

Quizplus · Accepted Answer

The net working capital turnover rate is calculated by dividing sales by net working capital (current assets minus current liabilities). Increasing sales, all else constant, would increase this turnover rate by increasing the numerator of the ratio.

When a Firm Wishes to Increase Its Net Working Capital