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Hello Tutor,
for exam Dec 2008,Q2 part (b),the examiner answer
“Overtrading is often associated with a rapid increase in turnover and Gorwa Co has experienced a 40% increase in
turnover over the last year. Investment in working capital has not matched the increase in sales, however, since the sales/net
working capital ratio has increased from 26·7 times to 30·5 times.”Which I don’t really understand the last sentence . What is mean for investment in working capital does not matched with an increase in sales?
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