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Question : Which of the following statements is incorrect with respect to working capital turnover ratio?

Option 1: Working Capital Turnover Ratio has been calculated on the basis of 'Revenue from Operations'.

Option 2: A high working capital turnover ratio shows efficient use of working capital and quick turnover of current assets like inventory and trade receivables.

Option 3: A low working capital turnover ratio indicates under-utilisation of working capital.

Option 4: None of the above.


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 10th Jan, 2024

Correct Answer: None of the above.


Solution : Answer = None of the above.

The working capital turnover ratio is calculated based on "Revenue from Operations." A higher ratio signifies efficient use of working capital, while a lower ratio indicates underutilization, accurately reflecting the efficiency of current asset management.
Hence, the correct option is 4.

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