Inventory Turnover Ratio calculator
Inventory Turnover Ratio is one of the efficiency ratios and measures the number of times, on average, the inventory is sold and replaced during the fiscal year. This ratio is used together with Days in Inventory ratio. Inventory Turnover Ratio formula is:
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Interpretation of Inventory Turnover Ratio
Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales. Its purpose is to measure the liquidity of the inventory.
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Definitions and terms used in the Inventory Turnover Ratio calculator
- Cost of Goods Sold (COGS): the direct cost attributable to the production or purchasing of the goods sold by a company during its fiscal year. It is also referred as Cost of sales.
- Inventory: the merchandise, raw materials and sub-assemblies, finished and unfinished products, consumables held available in stock by a business.
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