The turnover ratio indicates ________.

the number of times the capital has been rotated in the process of doing business

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the efficiency with which the capital employed is rotated in the business

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Both (A) and (B)

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Financial position of the company

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Solution

The correct option is C Both (A) and (B)
Turnover ratio is a measurement of the number of times a company's inventory is replaced during a given period of time. It is calculated by dividing cost of goods sold by average inventory during a given period of time. It indicates the number of times the capital has been rotated in the process of doing business as well as the efficiency with which the capital employed is totated in the business.

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