Posted in Inventory Turnover
Measures how an inventory is sold and replenished during a time period. Usually, inventory turnover is measured throughout the year. To arrive at a figure, the average inventory is computed and compared to the cost of goods sold within the same period. Inventory turnover is measures against industry averages. A low inventory turnover could mean excess inventory or excess investments that has zero rate of return. A low inventory turnover makes the company vulnerable to sudden price drops.
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