What is 'Inventory Turnover'?

Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Inventory Turnover Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. It is calculated as sales divided by average inventory. Breaking it Down: Inventory turnover measures how fast a company is selling inventory and is generally compared... Read More Related to "Inventory Turnover" What is the formula for calculating inventory turnover? Learn about the inventory turnover ratio, how it is calculated and what this efficiency metric tells businesses about their inventory and sales practices. Read More What does a high inventory turnover tell investors about a company? Inventory turnover is an important metric for evaluating how efficiently a firm turns its inventory into sales. Read More Inventory Valuation For Investors: FIFO And LIFO We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line. Read More Related Definitions Ending Inventory Ending inventory is a common financial metric measuring the final value of goods available for sale at the end of an accounting period. Read More Holding Costs The associated price of storing inventory or assets that remain unsold. Holding costs are a major component of supply chain management, since businesses must determine how much of a product to keep in stock. Read More Inventory Reserve An inventory reserve is a contra asset account on a company's balance sheet made in anticipation of inventory that will not be able to be sold. Read More Lower of Cost or Market Method The lower of cost or market method is a way to record the value of inventory which places an emphasis on not overstating the value of the assets. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: