Working Capital Turnover Ratio
Calculate the working capital turnover ratio, an efficiency ratio that measures how effectively a company uses its working capital to generate revenue.
A high working capital turnover ratio indicates that a company is generating a large amount of revenue relative to the working capital it employs, which can signal an efficient (or, if extreme, undercapitalized) operation. A low ratio can indicate excess inventory, slow receivables collection, or otherwise underutilized working capital.
The formula is as follows:
\[\text{Working Capital Turnover Ratio} = \text{Revenue} / \text{Average Working Capital}\]Working Capital Turnover Ratio in Python
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_working_capital_turnover_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
working_capital_turnover_ratios = toolkit.ratios.get_working_capital_turnover_ratio()
Parameters
The function accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.