The inventory turnover ratio indicates how well a company turns inventory into sales. These ratios vary by industry; some require higher or lower levels to sustain operations. These ratios should ...

For instance, to calculate an activity ratio like inventory turnover-a ratio that indicates how many times a company’s inventory is sold and replaced over a given timeframe-you would need to ...

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The inventory turnover ratio is calculated by dividing net sales by the average cost of inventory. A metric materially higher than industry averages may suggest that inventory purchases are ...