What is the current turnover turnover?
Current turnover turnover is an accounting accounting efficiency that applies to the company's financial statements. Income and balance sheets have the necessary information to calculate this ratio. The result of this formula is a metric that indicates how well the company generates sales from the current assets it owns. A higher number is generally more advantageous because the company uses its assets as effective as possible. Accountants can calculate the turnover ratio of current assets per month. The most common current assets include cash, cash equivalents, supplies and other general current assets listed in the balance sheet. In most cases, the company reports these items at the very top of the balance sheet section. The accountant reports these data for their historical costs, which is the amount paid by the company at the time of the purchase. In some cases, the inventory may decide to miss the inventory unless these items are often sold.
The current assets ratio is quite basic; The most common role patternIt means sale with average current assets. Revenues are the highest number reported in the company's profit statement. In addition, the average current assets have a step towards calculation. The accounting associates the initial monthly balance for the current assets and the end monthly balance for the current assets and then distributes this figure with two. The result is the denominator of the current asset turnover ratio.
The resulting value from the ratio of turnover of current assets is a metric that describes the use of current assets in detail. For example, the metric indicates how many times the company has undergone current assets to generate sales and therefore overturn these items. Higher numbers show that the company converts current assets to generate sales, the average is used by these items efficiently. A common way to look at it is the department of the characters through or below 1.0 from the ratio. Results of less than 1.0 suggest that the company will not turn their entirety in a given periodCurrent asset balance more than once.
Financial conditions work best as a scale. Accountants should compare the ratio of turnover of current assets to historical trends or industry average. This process can tell the company how well it works under the market conditions at a certain time. Owners and executives can often make changes in operations to improve this ratio.