What is 'Inventory Turnover'?

Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Term of the Day Inventory Turnover Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a period. The company can then divide the days in the period 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 sells inventory and analysts compare it to industry averages. Low turnover implies weak sales and, excess... Read More » Related to "Inventory Turnover" How do you calculate inventory turnover? Inventory turnover measures how many times inventory has sold during a period and provides insight into a company's inventory management and sales. 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 Holding costs are a major component of supply chain management because 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 » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy