• +880 1999423005
  • info@inventorysoftwareservices.com

What Is Inventory Turnover

Author : , Founder and CEO of Inventory Software Services
Published : 2018-09-05 10:17:16 Last Modified :
Inventory Turnover

Inventory turnover is the ratio of replaced inventory or sold items in a time period such as a week or a month or a year or any date range. It's needed to trucking an inventory's excessive stocks amount compare to sales. The equations of an inventory turnover are equal to the cost of the item sold divided by the average inventory.

Inventory turnover is also known as inventory turns, stock turnover, stock turns, turns, and merchandise turnover.

Formulas Of Inventory Turnover :

Inventory Turnover= Cost of Sold Items / Average Inventory .
or
Inventory Turnover= Net Sales / Average Inventory.
or
Inventory Turnover= {Material Cost - Change in inventories(of 1/2 or 1/1 goods)} / Inventories.
Basic average inventory formula:
Average Inventory=(Beginning Inventory + Ending Inventory) / 2 .
or
Average Inventory= Ending Inventory .

Average Days Formula :

Average days to sell the inventory= 365 Days/ Inventory Turnover Ration.
However, Inventory Turnover is the most basic formula for tracking inventory. It's an important part of modern inventory management.