Calculated by dividing annual sales by average stockholder equity (net worth). The ratio indicates how much a company could grow its current capital investment level. Low capital turnover generally corresponds to high profit margins.
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A ratio of how effectively a publicly-traded company manages the capital invested in it to produce revenues. It is calculated by taking the total of the company's annual sales and dividing it by the average stockholder equity, which is the average amount of money invested in the company. A high ratio indicates that the company is using its capital well, while a low ratio indicates the opposite. It is also called equity turnover.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A measure indicating how effectively investment capital is used to produce revenues. Capital turnover is expressed as a ratio of annual sales to invested capital.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.