Current Asset Turnover

Tax Glossary Definition

Current Asset Turnover

Current asset turnover is a financial ratio that measures how efficiently a company uses its current assets to generate sales. It is calculated by dividing net sales by average current assets during a period. A higher ratio indicates better utilization of short-term assets in business operations.

Example: During a tax audit, a Chartered Accountant may analyze the current asset turnover ratio to assess whether the company is efficiently managing its inventories, receivables, and other current assets relative to its sales.

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