Inventory Turnover / Inventory Turns Definition - Formula - Example - Analysis - Importance
Here we discuss about Inventory Turnover or Inventory Turns Definition, its formula, example, analysis or interpretations and its importance or significance according To Accounting Standards. Previously we discuss about Inventory Definition , but here we discuss about Inventory Turnover Definition. If you don’t read this article, then kindly, read out this topic in order to better understand this particular topic. Inventory Turns Meaning It is a ratio of Cost of Goods Sold To Average Inventory. This ratio tells us that how many times the company sells its stock or inventory to it customers and replaces (Turnovers) during the Current Accounting Cycle. Inventory Turnover Ratio Formula Cost of Sales / Average Inventory Here Average Inventory = Opening Inventory + Closing Inventory / 2 Analysis / Interpretation: If this ratio is higher then it means that the company is managing and selling its goods on hand effici...