Circulation of Current Assets (C.O.C.A)

Circulation of Current Assets (C.O.C.A)

Annualised Company Turnover ÷ Current Assets

Baseline: > 12 Times per Annum

Description:

This KPI is the ultimate Stock Turn calculation for your business as a whole.

The Current Assets of your business contain all of your stocks and therefore this KPI could be viewed as your overall company Stock Turn. The more times you use or circulate your Current Assets, the less money you need to invest in your stocks and therefore the more profit you will make as a direct result.

When you understand the awesome power of this KPI it is surprising that it is not seen in use within the motor industry.

Example:

A) Company Turnover = R14,523,661
B) Current Assets = R1,022,793
C) C.O.C.A = 14.2 times p/a (A ÷ B)

Discussion:

It is often possible to recover more profit through understanding this area of your business than it is from focusing on getting more profit margins from the products and services that you sell so this KPI is worthy of your full consideration.

Related Terminology:

» Motor Retail Terminology and Concepts