8/28/2023 0 Comments Idrive fulfillment![]() ![]() A ratio that is too low indicates slow sales and overstocking, leading to additional expenses such as high storage costs and lost business. Generally, a ratio between 4 and 6 is considered healthy, although this can vary depending on the industry and the type of product. Inventory Turnover Ratio Formula:Ī good inventory turnover ratio indicates a balance between restocking and sales. For example, if the cost of goods sold for 12 months is $300,000, and the average inventory value during the same period is $125,000, the inventory turnover ratio is 2.4. The average inventory value is the average value of inventory during the same period. COGS includes all direct and indirect costs related to producing and distributing a product. Your inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) for a specific period by the average inventory value during the same period. How do you find your inventory turnover ratio? It measures how efficiently a company sells and replenishes its inventory, providing insights into sales trends and inventory management strategies. Inventory turnover ratio is a crucial metric that businesses need to monitor to ensure their profitability and growth. So, whether you are a small business owner or the CEO of a large corporation, read on to learn more about inventory turnover and how to improve it to keep your business thriving. We will also explore what a good inventory turnover ratio is and how to achieve it. In this article, we will discuss what the inventory turnover ratio is, how to calculate it, and why it is important for your business's success. Just what the doctor ordered.Regardless of size or industry, inventory management is an important aspect of any business, and one of the most important metrics for measuring inventory management success is the inventory turnover ratio. Phil can enjoy all the benefits of cloud backup while staying safe from online threats. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |