Capital Turnover
Revenue divided by invested capital -- a measure of how many times a year the business cycles its operating capital base through the income statement. In the value-driver tree, capital turnover is the second factor that multiplies with NOPAT margin to produce ROIC. High-turnover businesses (3-5x or more) include discount retail, grocery, and distribution. Low-turnover businesses (0.5-1.5x) include capital-intensive industrials and branded consumer companies that hold large brand-supporting working capital.
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Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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