What is net working capital divided by annual turnover?
Net working capital is the amount of money the company needs to perform its work properly: purchasing goods, paying salaries, etc. The “net working capital/annual turnover” ratio relates this amount to the annual turnover. It is an indicator of whether the amount of working capital is proportionate to the size of the company. The ratio must not exceed a certain value (depending on the type of company). Working capital that is too high can indicate underlying problems such as stagnation in sales and excessive inventory.
