Question : Which of the following statements is incorrect with respect to working capital turnover ratio?
Option 1: Working Capital Turnover Ratio has been calculated on the basis of 'Revenue from Operations'.
Option 2: A high working capital turnover ratio shows efficient use of working capital and quick turnover of current assets like inventory and trade receivables.
Option 3: A low working capital turnover ratio indicates under-utilisation of working capital.
Option 4: None of the above.
Correct Answer: None of the above.
Solution : Answer = None of the above.
The working capital turnover ratio is calculated based on "Revenue from Operations." A higher ratio signifies efficient use of working capital, while a lower ratio indicates underutilization, accurately reflecting the efficiency of current asset management.
Hence, the correct option is 4.
