MANAGEMENT

Detailed explanation-1: -Inventory turnover measures how efficiently a company uses its inventory by dividing its cost of sales, or cost of goods sold (COGS), by the average value of its inventory for the same period. It is an especially important efficiency ratio for retailers.

Detailed explanation-2: -Inventory turnover ratio = Cost of goods sold * 2 / (Beginning inventory + Final inventory) The inventory turnover ratio is a measure of how many times your average inventory is “turned” or sold in a certain period of time.

Detailed explanation-3: -You can calculate your average inventory by adding your beginning period inventory and ending period inventory, then dividing that total by the time period.

Detailed explanation-4: -Yes, Inventory Turnover Ratio is also known as Stock Turnover Ratio. It establishes the relationship between the cost of goods sold during the year and average inventory held during the year.

Detailed explanation-5: -Another way to calculate the average inventory is to take the total cost of goods sold (COGS) during a period and divide it by the number of days in that period. Regardless of the method used, average inventory provides valuable information you can use for business-critical decisions.