See Inventory Turns.

see turnover

An inventory investment and activity measure that compares inventory usage (as defined by the annual cost of goods sold) divided by the inventory investment (as defined as the average inventory level at standard cost). Higher values indicate a more efficient use of inventory; absolute targets can only be set based on relevant industry figures, as the turnover for grocery chains is vastly different than for capital goods manufacturers.

How often the inventory is sold and replenished over the course of a year.

a measure of how often the business rotates inventory during one year. Calculated by dividing inventory into net sales. (Net Sales / Inventory) Page 331

the number of times the average inventory has been sold during a period.

The number of times that an inventory “turns over” or cycles during the year.

The rate at which a company sells or turns over its inventory.

Net sales divided by average retail inventory. A measure of the effectiveness with which the money invested in inventory is used.

This value measures how quickly the Inventory is sold. It is defined as Cost of Goods Sold for the twelve months divided by Average Inventory. Average Inventory is calculated by adding the inventory for the most recent annual report and dividing by 12.

The ratio of product sales over the average amount of product in inventory for a specified time. It can be calculated using retail dollars for sales and inventory, dividing cost of goods sold by the average cost of inventory, or by using units for all components. For example, if calculating turnover for a one month period, the formula would be: Sales / ((Beginning Inventory on hand) + (Ending Inventory on hand) / 2)

Number of times, on average, that each item in inventory cycles, or is issued and replaced during a year. A common way to compute inventory turnover is to divide the total annual value of all inventory issues by the current inventory value. For example, if total value of inventory issues for the entire year were ten million dollars and the value of the inventory, as determined by year-end count were two million, then the inventory turnover would be five times. This means that, on average, each item in inventory would have been issued and replaced five times during the year. INVITATION TO BID--A request, verbal or written, which is made to prospective suppliers for their quotation or offer to sell goods or services desired by the purchaser. Also known as Requests for Quotation.

The ratio of the cost of goods sold to the average inventory for a year.

The number of times a company has sold and replaced its inventory in the most recently completed fiscal year. more...

sales divided by year-end inventory. A measure of the efficiency of inventory management.

a ratio that indicates the amount of inventory a company uses to support a given level of sales. The formula is: Inventory Turnover = Cost of Sales ¸ Average Inventory. Different businesses have different general turnover levels. The ratio is significant in comparison with the ratio for previous periods or the ratio for similar businesses.

measures the movement of how rapidly inventory can be converted into cash within a period. Turn is calculated by dividing the cost of goods sold by an average inventory amount.

The rate at which products must be restocked because of customer sales.

The number of times the inventory in a business is sold during a given accounting period, usually a year. This is a valuable management performance comparison tool. Although not the most accurate measure of inventory turnover, it is often computed by dividing sales by the average inventory on hand. Whatever the method, if it is consistent from year to year, it serves to let management know the relative performance of the company from year to year. Example: If average inventory is $100,000 and annual sales are $900,000, the inventory was turned over nine times. A business should compare current inventory turnover to prior year's inventory turns and find out what causes any variation.

Used by a fundamental analyst when examining a corporation's financial statement. It is the company's cost of goods sold (from the income statement) divided by the year-end inventory (from the balance sheet).

Inventory turnover is total cost of sales divided by inventory. Inventory turnover is usually calculated using the average inventory over an accounting period, not an ending-inventory value.

The ratio of annual sales to inventory. Low turnover is an unhealthy sign, indicating excess stocks and/or poor sales.

The number of times a year a company sells its inventory. This is calculated as the ratio of annual sales to the average value of inventory. An equivalent measure is the fraction of a year an average product remains in inventory.

Provides an indication of the efficiency of the firm’s inventory management. A higher ratio is an indication that inventory does not languish in warehouses or on the shelves, but rather “turns over” rapidly as it moves quickly from time of acquisition to sale. Inventory turnover is calculated by dividing cost of goods sold by average inventory.

Indicates the liquidity of the inventory. Formula Cost of Goods Sold Average Inventory

Total sales divided by average inventory. Indicates how quickly inventory is sold in a year. A very low inventory turnover results whn a company is tying up its capital in nonproductive assets.

Provides an estimate of how many times inventory is turned over by a business during a typical operating cycle. The ratio is defined as: Cost of Sales/Inventory. The higher the number, the greater the number of times inventory is turned over by a business.

An indicator of the rapidity with which a corporation's inventory is manufactured and sold.

a ratio for evaluating sales effectiveness. For a given accounting period divide total revenue for the product by the average retail value of the product inventory.

The rate at which a company's products are produced and sold. The rate is determined by dividing the annual cost of goods sold by the value of the inventory. The result tells how many times a year a company can completely sell out its products.

A ratio that shows how many times the inventory of a firm is sold and replaced over a specific period.

The number of times that an inventory cycles, or “turns over,” during the year. A frequently used method to compute inventory turnover is to divide the average inventory level into the annual cost of sales. For example, an average inventory of $3 million divided into an annual cost of sales of $21 million means that inventory turned over seven times. Syn: inventory turns, turnover. See: inventory velocity

The Inventory Turnover is an equation that equals the cost of goods sold divided by the average inventory. Average inventory equals beginning inventory plus ending inventory divided by 2. A low turnover rate may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort.