This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
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.
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Calculator for Inventory Turnover OR Inventory Turns
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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.