Question

What is the difference between stock and working capital turnover ratio?

Answer 1

Dear Student


The basic difference between Stock and working capital turnover ratio is that,
Stock turnover ratio tells us the speed of conversion of stock into sales i.e the more the ratio, we can understand that stock is efficiently used by the firm
Similarly, working capital turnover ratio tells us the same thing but in respect of Working capital (Current assets - Current liabilities) i.e how efficiently working capital is used into business.

Therefore working capital contains all the current assets and liabilities so it provides cumulative performance whereas stock turnover ratio gives information only about stocks.


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