What Is Current Assets Turnover?

The turnover ratio of current assets refers to the ratio of the company's net main business income to the average total current assets within a certain period of time. Through a comparative analysis of this indicator, companies can be encouraged to strengthen internal management and make full use of current assets, such as mobilizing temporarily idle monetary funds for short-term investment to create income. It can also promote enterprises to take measures to expand sales and increase the comprehensive utilization rate of current assets ^[1] .

Turnover ratio of current assets

Two ways to represent the turnover rate of current assets:

1. The number of turnover of current assets in a certain period, the calculation formula is:

Number of turnover of current assets = turnover of current assets (product sales revenue) / average balance of current assets

2. The number of days required for a turnover of current assets, calculated as:

Turnover days of current assets = average balance of current assets * days of calculation period / turnover of current assets (product sales revenue)

In a certain period, the greater the number of turnovers of current assets, it means that the more turnovers completed with the same current assets, the better the effect of current asset utilization. When the turnover rate of current assets is expressed in terms of turnover days, the fewer days it takes to turn around once, it means that the shorter the time occupied by the current assets during the production and sales stages, the faster the turnover. The improvement of work in any aspect of production and operation will be reflected in the shortened turnover days. The turnover rate of current assets expressed by days can more directly reflect the improvement of production and operation conditions, which is convenient to compare the turnover rate of current assets in different periods, and is widely used.