This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
Inventory Turnover ratio: Cost of Sales (COS) divided by the average value of Inventory on hand.
Example: The Round Number CompanyCost of Sales = 80; Inventory = 50 Inventory Turnover = 80/50 =1.6 |
This ratio is the number of times a business sells out its Inventory during the year.
Inventory Turnover us also called Inventory Turns.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.