Inventory Turnover Low Definition
Inventory turnover is a measure of how many times a company’s inventory is sold or used in a period. The higher the number, the more efficient the company is at managing its inventory. A low inventory turnover can be indicative of several problems, such as poor sales, excess inventory, or inefficient production.
A low inventory turnover can be problematic for a company because it can tie up capital in unsold inventory. This can lead to cash flow problems and difficulty meeting financial obligations. In addition, excess inventory can lead to storage costs and deterioration of products.
There are several ways to improve inventory turnover. One is to increase sales through marketing and promotions. Another is to reduce the amount of inventory on hand by streamlining production and using just-in-time methods. Finally, companies can improve their forecasting to better match production with demand.
