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ending inventory
Number of days inventory in hand tells about how many day's inventory is available while inventory turnover tells about how many times in a fiscal year inventory is used to convert to finished goods for sale.
cost of goods sold/ Average inventory
Higher Rates
Slow inventory turnover means that you have too much capital invested in inventory. You could reduce inventory levels and put that money to better use - marketing, reduction of debt, etc
25 times for manufacturing companies
Forbes.com has an up-to-date (Last 12 months) list of ratios for companies. In the last 12 months (From 11/15/11), Target as an inventory turnover of 6.0.
Inventory turnover is the standard at which product inventory is acquired or made and further sold within a year. An assessment of all inventory-related business factors will have an impact on inventory turnover.
Generally inventory turnover period is calculated as: Sales/Inventory Also by, Cost of Goods Sold/ Average Inventory
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory and Average Inventory = ( Beginning Inventory + Ending Inventory ) / 2
The annual inventory turnover in the retail painting industry is obtained by dividing the Annual Cost of Sales by the Average Inventory Level. A low inventory turnover ratio is a signal of inefficiency.
prophitability
To calculate the inventory turnover ratio, you need to divide the cost of goods sold by the average inventory. To find the average inventory, add the beginning and ending inventory levels and divide by 2. In this case, the average inventory is (4500 + 5500) / 2 = 5000. The inventory turnover ratio would be 20000 / 5000 = 4.
ending inventory
An aircraft company will incur low inventory turnover if the stock is purchased as bulk and demand is low, thus slow discharge of inventory.
Number of days inventory in hand tells about how many day's inventory is available while inventory turnover tells about how many times in a fiscal year inventory is used to convert to finished goods for sale.
cost of goods sold/ Average inventory