Inventory Turnover Is Calculated By Dividing

Inventory turnover is an important metric for any business, providing insight into the efficiency of its operations. It is calculated by taking the cost of goods sold in a given period and dividing it by average inventory during the same period. A high inventory turnover ratio shows that a company is purchasing the right amounts of inventory and selling it quickly; a low inventory turnover ratio suggests that a company may be overbought or have inefficient supply chain processes. Understanding your inventory turnover rate can help you make informed decisions about your company’s performance and ensure that you are getting the best value out of your inventory.