Current asset turnover ratio – meaning and formula

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The current assets turnover ratio ascertains the efficiency with which current assets are used in a business. This ratio is strongly associated with the efficient utilization of cash, receivables, and inventory. A higher value of this ratio indicates greater circulation of current assets while a low ratio indicates a stagnation of the flow of current assets.

The formula for the computation of current assets turnover ratio is:

Current asset ratio = sales/current asset

Author: amidu edson

I am certified accountant with more than 5 years of teaching experience. Currently am teaching auditing and assurance, management accounting and financial accounting for student preparing for professional exams such as ACCA and CPA.

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