Inventory Turnover

Definition: Average amount of time an item remains in inventory. Definition: [crh] A measure of how often the company sells and replaces its inventory. It is the ratio of annual cost of sales to the lastest inventory. One can also interpret the ratio as the time to which inventory is held. For example a ratio of 26 implies that investory is held, on average, for two weeks. It is best to usDefinition: e this ratio to compare companies within an industry (high turnover is a good sign) because there are huge differences in this ratio across industries.

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