Capital Turnover

Capital turnover refers to the speed at which a company recycles its working capital through procurement, production, and sales within a certain period, and reinvests it. It is usually measured by turnover times or turnover days. In foreign trade, this indicator reflects the efficiency with which a company uses its working capital to complete orders, collect payments, and invest in the next round of orders. Use cases include: assessing the impact of customer credit terms on cash flow, calculating the capital occupation cost under letters of credit or documentary collections, and optimizing inventory and accounts receivable management. Note: Foreign trade capital turnover is affected by exchange rate fluctuations, transportation cycles, settlement methods (such as T/T, L/C, D/P), and tax rebate speed. It should be combined with cash flow forecasting rather than only looking at profit. The difference from 'profit margin' is that capital turnover focuses on the speed of capital recovery and liquidity, while profit margin focuses on the profitability of a single transaction; a high profit margin but slow turnover may lead to cash flow rupture. Compared with 'inventory turnover', capital turnover covers a broader scope, including accounts receivable, accounts payable, and the cash cycle.