Measures how often a company’s inventory is sold and replaced over a period.
What it Measures ?
How fast we are selling and replacing inventory.
Relevant StakeHolders
Operations Manager, Finance Team
In-depth Use Case / Real-world Example
Inventory Turnover Ratio is calculated by dividing COGS by average inventory. If a company has ₹400,000 in COGS and an average inventory of ₹100,000, the ratio is 4. A higher ratio indicates efficient inventory management and strong sales. Companies with lower turnover may face excess inventory or weak sales.
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