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Working capital turnover is an accounting ratio that helps show how efficiently a company is generating revenue per dollar of cash available to spend on operations. It is calculated by dividing sales revenue by working capital.

Working capital is company cash that is available to spend on operations within the year, or whatever time period is being evaluated. It includes both cash and short-term assets that can quickly convert to cash.

To calculate working capital, take current assets and subtract current liabilities.

Current assets include cash, accounts receivable, inventory, marketable securities and other liquid assets that will be converted to cash within a year. Current liabilities include short-term debt, accounts payable and other debts that will be paid within the year.

To calculate working capital turnover, divide sales revenue by working capital. The larger the resulting number, the more efficiently the company is turning cash into revenue.

For example, in 2013, Facebook had $13 billion in current assets and $1 billion in current liabilities, for working capital of $12 billion. It also had $8 billion in revenue. Therefore, its working capital turnover, or WCT, was .66.

By comparison, Google had WCT of 1.05, and Yahoo, 1.27. So analysts could conclude that Facebook did not yet use working capital as efficiently as similar companies to generate revenue.

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