MANAGEMENT

Detailed explanation-1: -Inventory turnover is the rate that inventory stock is sold, or used, and replaced. The inventory turnover ratio is calculated by dividing the cost of goods by average inventory for the same period. A higher ratio tends to point to strong sales and a lower one to weak sales.

Detailed explanation-2: -You can calculate the inventory turnover ratio by dividing the inventory days ratio by 365 and flipping the ratio. In this example, inventory turnover ratio = 1 / (73/365) = 5. This means the company can sell and replace its stock of goods five times a year.

Detailed explanation-3: -Inventory turnover is expressed as a ratio, indicating the number of times a company sells its inventory during a period, usually a year. Higher inventory turnover ratios are a good thing for businesses because they indicate faster sales and lower inventory levels, which reduces inventory costs.

Detailed explanation-4: -The average inventory turnover period is one year. Some companies will choose to measure their inventory turnover over a period of a month or business trading quarter.

Detailed explanation-5: -The stock turnover ratio formula is the cost of goods sold divided by average inventory.