Hello Speedy Reader! 🏁
Welcome to this whirlwind tour of one of accounting’s niftiest ratios—Capital Turnover (a.k.a. Asset Turnover). But don’t worry, we promise to make it fun and perhaps worth a few giggles along the way. Ready? Set… GO! 🏃♀️💨
What the Heck is Capital Turnover? 🤔
Capital Turnover sounds like a racecar zooming around a track, doesn’t it? And in a way, it is—it’s all about how speedily a company can use its assets to generate sales revenue. The formula is pretty straightforward:
Capital Turnover = Sales / Capital Employed
That’s as easy as pie—or should we say as easy as balancing a balance sheet? 🥧
Breakdown and the Brain Frell Diagram 🧠
Here’s a little visual help. Imagine a company as a friendly tortoise slowly acquiring assets and current liabilities (who for this analogy, we’ll name
