Answer Posted / chalapathi rao govada
Turnover Ratio stnds for one balance sheet element is going
to be expressed interms of Net sales of the such
organisation.
The main logic behind calculating the Turnover ratios is to
know how many times such organisation had the sales when
compared to Balance sheet item.
Eg: Inventory Turnover Ratio:
The purpose of it is to know how many times we are able to
generate the sale compared to the closing stock ie B/S item.
Formula:
ITR = Cost of Goods sold/Average inventory
Fixed Assets Turnover Ratio: Net sales/Fixed Assets.
Working capital Turnover Ratio: Net sales/Net working
capital
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