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The cash turnover ratio indicates how many times a company went through its cash balance over an accounting period and the efficiency of a company’s cash in the generation of revenue. Additionally, the cash turnover ratio is often used by accountants for budgeting purposes.
Cash turnover ratio is the ratio that measures the number of times that a company uses its cash to generate sales. It is the comparison between cash on hand and the annual sale. It helps to estimate the required cash or cash equivalent needed to achieve the target sale.
1 Οκτ 2024 · The cash turnover ratio (CTR) is a profitability and efficiency ratio that measures how many times a company uses its cash to generate revenues. It measures the efficiency of a company to turn over its cash balance into sales revenue in an accounting period.
24 Δεκ 2023 · The Cash Turnover Ratio (CTR) is an efficiency ratio that describes how frequently a company's cash was used to produce sales or revenue over the course of an accounting period. Businesses that operate on a cash basis rather than a credit basis typically employ it.
7 Δεκ 2023 · Example of the Cash Turnover Ratio. A business generates $10,000,000 of sales in its most recent year. The average month-end cash balance of the firm was $1,000,000. This means the cash turnover ratio of the organization was 10x per year.
The cash turnover ratio indicates how many times a company went through its cash balance over an accounting period and the efficiency of a company’s cash in the generation of revenue. Additionally, the cash turnover ratio is often used by accountants for budgeting purposes.
This is an advanced guide on how to calculate Cash Turnover Ratio with in-depth interpretation, example, and analysis. You will learn how to use this ratio's formula to evaluate a firm's efficiency.
