inventory turnover

(redirected from Inventory Turnovers)

Inventory turnover

A measure of how often the company sells and replaces its inventory. It is the ratio of annual cost of sales to the latest inventory. One can also interpret the ratio as the time to which inventory is held. For example a ratio of 26 implies that inventory is held, on average, for two weeks (365 days in a year divided by inventory turnover ratio of 26 equals 14 days pr 2 weeks average inventory holding period). It is best to use this ratio to compare companies within an industry (high turnover is a good sign) because there are huge differences in this ratio across industries.

Inventory Turnover

A measure of how long it takes, on average, for a company to sell and replace its inventory. Inventory turnover can help a company or potential investor determine how well the company manages its inventory. Higher inventory turnover is considered to be desirable. The turnover is calculated as follows:

Inventory turnover = Cost of goods sold / ( ( Beginning inventory + ending inventory ) / 2 )

inventory turnover

A measure indicating the number of times a firm sells and replaces its inventory during a given period and calculated by dividing the cost of goods sold by the average inventory level. A relatively low inventory turnover may indicate ineffective inventory management (that is, carrying too large an inventory) or carrying out-of-date inventory to avoid writing off inventory losses against income. A high inventory turnover is generally desirable.
References in periodicals archive ?
In this paper, we look at the effects on inventory turnovers of U.
manufacturing firms' short-term financial management measures including net working capital, inventory turnover and receivables turnover are examined over the 1971-2005 period.
What is the impact of monetary policy on firms' short-term financial management measures including net working capital, inventory turnover and receivables turnover?
We are interested in the behavior of firms' net working capital, inventory turnover and receivables turnovers when monetary policy is contractionary, and check whether certain firm characteristics help to insulate the firms from the effects of tighter monetary policy.
In this paper, we examine the interaction between degree of firm leverage and monetary policy in affecting the firms' net working capital, inventory turnover and receivables.
In our paper, we examine the effects on inventory turnover of U.
The median values of inventory turnover, receivables turnover, and total asset turnover are 1.
Table 4 shows the results of the robust regressions that explain firms' inventory turnover ratios by firm characteristics, the medium and the heavy industry dummies, the time variable, the "Contractionary" dummy, and the Leverage*Contractionary interaction term.
Both the medium and the heavy industry groups tend to have better inventory turnover ratios compared to the light industry group (both differences are significant at one percent level).
Here, we are seeing that monetary policy has different impacts on high leverage and low leverage firms' inventory turnover ratios.
With analgesic products producing up to 21 inventory turnovers per year, the upside potential is dramatic and very exciting.
IEX continues to improve working capital including inventory turnovers and collection of past due account receivables.