The ratio of a company's annual sales to its inventory; or equivalently, the fraction of a year that an average item remains in inventory. Low turnover is a sign of inefficiency, since inventory usually has a rate of return of zero. For instance, if a company was able to generate $10 million in sales but averaged $5 million in inventory, the inventory turnover would be 10 million / 5 million = 2. This number indicates that there would be 2 inventory turns per year, meaning that it would take 6 months to sell all the inventory.
Related information about inventory turnover:
- Inventory Turnover Definition | Investopedia
A ratio showing how many times a company's inventory is sold and replaced over a period. the The days in the period can then be divided by the inventory ...
- Inventory turnover - Wikipedia, the free encyclopedia
In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory ...
- Inventory Turnover Ratio Formula | Analysis | Example
Inventory turnover is the ratio of cost of goods sold to average inventory. The formula to calculate is: Inventory Turnover = Cost of Goods Sold / Average ...
- Inventory Turns - How to Calculate Inventory Turnover
Inventory turns and inventory turnover can be calculated for any company using the information found on the income statement and balance sheet.
- Inventory Turnover - Financial Dictionary - The Free Dictionary
A measure of how often the company sells and replaces its inventory. It is the ratio of annual cost of sales to the latest inventory. One can also interpret the ratio ...
- What Does Inventory Turnover Mean for a Business? | Chron.com
When discussing turnover in relation to inventory, it is a reference to how quickly the company is pulling in product sales. To determine inventory turnover, you ...
- Inventory Turnover
An explanation of inventory turnover - how to compute it, how to interpret it.
- Inventory Turnover Ratio
The inventory turnover ratio is a common measure of the firm's operational ... Ideally the inventory turnover ratio would be calculated as units sold divided by ...