8/26/2023 0 Comments Inventories turnover ratio formulaInventory Turnover Ratio = Cost of goods sold / Average inventoryīefore we apply the above formula, let’s understand the cost of goods sold, average inventory and how to determine these. Formula to calculate inventory turnover ratio In simple words, the number of times the company sells its inventory during the period. Inventory turnover ratio explains how much of stock held by the business has been converted into sales. It is also called a stock turnover ratio. Inventory turnover ratio is an accounting ratio that establishes a relationship between the revenue cost, more commonly known as the cost of goods sold and average inventory carried during the period.
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