Measure how efficiently your business manages its stock by calculating your turnover ratio and average days to sell inventory.
Inventory Turnover Ratio:
10 times
Days Sales in Inventory (DSI):
36.5 days
A higher ratio generally indicates better performance, as it suggests the company is efficiently selling and restocking its products.
Inventory turnover measures how many times a company has sold and replaced inventory during a specific period.
Formula: Inventory Turnover = COGS / Average Inventory
Inventory Turnover = COGS / Average Inventory
If your business has a COGS of $200,000 and maintains an average inventory of $40,000.
It varies by industry, but a higher ratio usually indicates efficient sales and inventory management.
A low ratio may suggest weak sales or excess inventory, often referred to as overstocking.
Improvement can come from increasing sales demand or reducing the amount of stock held on hand.
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