Inventory Turnover

What is it? The rate that a company?s products are produced and sold. Inventory turnover is determined by dividing the annual cost of goods sold by the value of the inventory. The resulting number tells how many times a year a company can completely sell out its products. The faster a company can turn over its inventory, the better off it is because it has more money to use on other things, such as research and development, marketing, and expansion. Inventory turnover varies from industry to industry. So it is important to compare companies in the same industry. The one that has the highest inventory turnover is most likely to be able to fund its own growth.

Added By: Makayla

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