![]() ![]() The period can be a month, a quarter, or a year. The average inventory is the average value of inventory that a company holds during a given period. It includes the cost of raw materials, labor, and overhead. The cost of goods sold includes all the direct costs associated with the production or acquisition of the goods sold. Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory The formula to calculate the inventory turnover ratio is as follows: In simple terms, the inventory turnover ratio measures the number of times a company sells and replaces its inventory. Inventory turnover ratio is a vital metric for any business that deals with physical products. Understanding Inventory Turnover Ratio: A Comprehensive Guide The Pros and Cons of a High or Low Inventory Turnover Ratio: What You Need to Know.How to Use Technology to Streamline Your Inventory Management and Boost Your Inventory Turnover Ratio.Using Inventory Turnover Ratio to Make Informed Purchasing Decisions.Industry Benchmarks for Inventory Turnover Ratio: Are You Keeping Up?.The Relationship Between Inventory Turnover Ratio and Cash Flow.How to Improve Your Inventory Turnover Ratio: Best Practices and Tips.Common Mistakes in Calculating Inventory Turnover Ratio (and How to Avoid Them).Interpreting Your Inventory Turnover Ratio Results: What Do They Mean?.Calculating Inventory Turnover Ratio: Step-by-Step Instructions.Why Inventory Turnover Ratio Matters for Your Business.Understanding Inventory Turnover Ratio: A Comprehensive Guide.
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