Working Capital Turnover formula
\[ \dfrac{\text{Revenue}}{\text{Average Net Working Capital}} \]
Terms
- Net Working Capital, average of opening and closing: The amount by which current assets exceed current liabilities: the cushion that funds day-to-day operations. It is the current ratio expressed in money instead of as a ratio.
- Revenue, period total: Net sales of goods and services for the period, after discounts and allowances.
Result
Working Capital Turnover is a ratio. Higher is better.
Target
There is no general target; compare with the company’s own history and with peers in the same industry.
Working Capital Turnover pitfalls
- When net working capital is close to zero or negative, the ratio jumps or flips sign and stops being informative.
Working Capital Turnover in Business Central
Current assets (average of opening and closing)
- Category Current Assets (2) and every category below it
- Plus 10 accounts assigned directly: 15910 Current Receivable from Employees, 15920 Accrued income not yet invoiced, 15930 Clearing Accounts for Taxes and charges, 15940 Tax Assets, 15950 Current Receivables from group companies, 17100 Bonds, 17120 Decreases during the Year, 17200 Convertible debt instruments, 17300 Other short-term Investments, 17400 Write-down of Short-term investments
38 posting accounts in total.
The full account list is on the Current assets page.
Current liabilities (average of opening and closing)
- Category Current Liabilities (11) and every category below it
- Category Payroll Liabilities (12) and every category below it
- Plus 8 accounts assigned directly: 23850 Employees Payable, 26100 Accrued wages/salaries, 26200 Accrued Holiday pay, 26300 Accrued Pension costs, 26400 Accrued Interest Expense, 26500 Deferred Income, 26600 Accrued Contractual costs, 26700 Other Accrued Expenses and Deferred Income
29 posting accounts in total.
The full account list is on the Current liabilities page.
Revenue (period total)
- Category Income, Services (19) and every category below it
- Category Income, Product Sales (20) and every category below it
- Category Income, Jobs (21) and every category below it
- Category Sales Discounts (22) and every category below it
- Category Sales Returns & Allowances (23) and every category below it
- Category Job Sales Contra (25) and every category below it
- Plus 8 accounts assigned directly: 40410 Job Sales, 40420 Job Sales Applied, 40430 Sales of Service Contracts, 40440 Sales of Service Work, 40910 Discounts and Allowances, 40920 Invoice Rounding, 40930 Payment Tolerance, 40940 Sales Returns
13 posting accounts in total.
The full account list is on the Revenue page.
Add Working Capital Turnover to a Power BI report
I build Power BI finance reports on Business Central data, with Working Capital Turnover, its trend and, where it helps, a forecast with a likely range. See it on your data