Therefore, to assess how active a market is, one should look at both measures. The correlation, however, is about 0.4 and not close to 1. high capitalization does not mean that a market is necessarily also very active.Īlso, note that the turnover ratio has a positive correlation with another measure of stock market activity: Value traded which is the total volume of all stock market trades over a year divided by the GDP (not by the market capitalization). The next largest country by stock market. The percentage result represents what percent of all available shares that could have been traded were actually traded. In 2023, stock markets in the United States accounted for nearly 60 percent of world stocks. Share turnover is calculated by dividing the average number of shares traded over a given period by the average number of total outstanding shares for that same period. However, the correlation is not close to 1, i.e. Published by Statista Research Department, Mar 30, 2023. The positive correlation means that, for the most part, larger markets are also relatively active. The inventory turnover ratio, also known as the stock turnover ratio, is an efficiency ratio that measures how efficiently inventory is managed. Stock Turnover, 2020A 90 million 60 million 1.5x Stock Turnover, 2021A 95 million 50 million 1.9x Stock Turnover, 2022A 100 million 40 million 2. Looking at all countries with a stock market over the last ten years, the correlation between the market capitalization and the turnover ratio is about 0.5. In closing, the stock turnover ratio of our hypothetical company was 1.5x, 1.9x, and 2.5x from 2020 to 2022. Conversely, there may be relatively few listed companies and relatively low market capitalization but many trades. Review Costco Wholesale Corp (COST:XNAS) stocks current information regarding return on assets, equity, invested capital, margins, and turnover over the last fiscal year. A country may have many listed companies or large market capitalization but relatively few active trades. As such, the ratio is a measure of how active the stock market is. Discussion: The stock market turnover ratio equals “the value of all stock market trades (the number of transactions times their values) / the market value of all listed companies (the number of shares outstanding times their values)". Inventory turnover ratio (ITR) is an activity ratio which evaluates the liquidity of a company’s inventory.
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