The Cash Turnover Ratio measures a company’s ability to efficiently convert its cash into sales. It reflects the rate of turnover for a company’s cash resources and its commitment to investing in activities that generate income. To calculate this ratio, simply divide the total sales over a certain period of time by the company’s total cash. The higher the ratio, the more efficient the company is at making money with its cash. If a company has a low Cash Turnover Ratio, it may indicate operational inefficiency or a lack of investments in items that could generate income. Knowing your Cash Turnover Ratio can help you make decisions about where to allocate your resources and allow you to spot potential improvement areas before they become larger problems.