The working capital of a small home-based business is $200,000.The revenues generated account to $600,000,and the profits incurred are $300,000.What would be the company's working capital turnover?
A) 3, that is, $600,000/$200,000
B) $300,000, that is, $600,000 - $300,000
C) 2, that is, $600,000/$300,000
D) $100,000, that is, $300,000 - $200,000

Question

Quizplus · Accepted Answer

The company's working capital turnover would be 3, that is, $600,000/$200,000. A component of return on invested capital is working capital turnover, which is a measure of how effectively capital is being used to generate revenue. Working capital turnover is expressed as revenue/working capital.

The Working Capital of a Small Home-Based Business Is $200,000