Inventory Turnover

Inventory Turnover is a term that indicates the average number of days after which the inventory is bound in the enterprise until their consumption (raw material) or until their sale (supplies of own production). Generally, the situation in the enterprise is good if inventory turnover ratio increases and inventory turnover decreases. The issue of inventory optimization is focused in the field of financial management.

Calculation:

Inventory Turnover = Inventory (Stocks) / (Sales/360)

Use of the Inventory Turnover in practice: In the enterprise it used by CFO in financial analysis to analyze ratios.