What does the current asset turnover ratio mean for a business?

The increase in the current asset turnover ratio indicates the following:

1. Enhance capital operation capacity: Enterprises can use their current assets more efficiently, so that they can turn over multiple times in a certain period of time, so as to better realize the enhancement of capital operation capabilities.

3. Cost control: Unless the company invests to expand its business, the rise in current assets may represent a better control of costs in the existing business, thereby improving profit margins.

The current asset turnover ratio is a financial indicator that measures the speed at which an enterprise's current assets are converted in a certain period of time, that is, the ratio of the company's annual sales to the total current assets of the enterprise. If the turnover rate of current assets increases, it means that the use efficiency of the company's current assets will increase under the same conditions, that is, the same number of assets can create more sales revenue, and vice versa. Loose tomato.

Factors influencing the turnover ratio of current assets

1. Inventory level: The inventory level of the enterprise will directly affect the turnover rate of current assets, because a large amount of inventory often means that the enterprise needs more funds to support them, resulting in an increase in the occupation of current assets.

2. Seasonal changes in sales: Seasonal changes in sales, such as the peak season for holiday shopping, may lead to fluctuations in the capital turnover rate, because during seasonal changes, enterprises need more liquid assets to support peak sales.

3. Major merchants and customers: changes in the company's main merchants and customers may have a direct impact on the turnover rate, such as the unsalable inventory of the company's unsalable excess may lead to the binding of the company's current assets.

Current Asset Turnover Ratio (current.)

assets

turnover) is an indicator that reflects the turnover rate of current assets of an enterprise. It is the ratio between the average occupancy of current assets and the turnover of current assets completed in a certain period.

In a certain period, the more times the turnover of current assets, the more turnover completed with the same current assets, the better the effect of current asset utilization. When the current asset turnover ratio is expressed in terms of turnover days, the fewer days required for a turnover, indicating that the shorter the time occupied by the current assets as they go through the stages of production and sales, the faster the turnover.

Its current asset turnover ratio here = cost of sales [(current assets at the beginning of the year + current assets at the end of the year) 2]=250*(1-20%) 90+100) 2], so choose B

2 times. The estimate takes into account that inventory is the most important component of current assets, and the inventory turnover ratio is calculated on the basis of the numerator of the cost of sales.

Current asset turnover rate: the embodiment of the current asset turnover rate of an enterprise.

The turnover rate of current assets is an important indicator in the financial management of enterprises, which reflects the efficiency of the use of current assets in the enterprise collapse shipping industry. This indicator can be expanded in four ways, including the following:

1.Definition and calculation methodology.

The current asset turnover rate refers to the turnover rate of current assets (such as inventory, accounts receivable, prepaid accounts, etc.) of an enterprise in a specific period of time. It is usually calculated by sales revenue or operating income, and the calculation formula is: current asset turnover ratio = sales revenue average current assets.

Among them, average current assets refer to the average of current assets at the beginning and end of the period.

2.Influencing factors.

There are many factors that affect the turnover rate of current assets, mainly including the internal management ability of the enterprise, the market and other aspects. First of all, the internal operation and management ability of an enterprise is the key factor affecting the turnover rate of current assets. If the enterprise is not well managed, resulting in inventory backlog, accounts receivable** slow, etc., it will reduce the turnover rate of current assets.

Secondly, the market** also affects the turnover ratio of current assets. For example, the industry is not prosperous, customer demand will decrease, and sales revenue will decline, thereby reducing the turnover rate of current assets.

3.Meaning and role.

The turnover ratio of current assets is an important indicator that reflects the efficiency of the use of current assets of an enterprise. A high turnover rate of current assets means that the company's capital turnover is fast, and the current assets are fully utilized, which can ensure the normal operation of the enterprise. Therefore, enterprises should improve the efficiency of capital use and the profitability of enterprises by improving the turnover rate of current assets.

4.Scope of application.

The current asset turnover rate is suitable for all kinds of enterprises, especially those enterprises with large demand for working capital and large amount of current assets. In particular, enterprises in the production and sales industry, due to the large proportion of current assets in total assets, need to pay more attention to the indicators of current asset turnover rate to ensure the operation of enterprises. In short, as an important indicator in the financial management of enterprises, the turnover rate of current assets can be supplemented and expanded from four aspects: definition and calculation method, influencing factors, significance and function, and application scope, so as to help enterprises better understand and apply the index.