Академический Документы
Профессиональный Документы
Культура Документы
Search Investopedia
DICTIONARY
#
INVESTING
B
TRADING
E
PERSONAL
FINANCE
MARKETS
G
Modernize
yourdata
center
WEALTH
MANAGEMENT
L
Symbol
FINANCIAL
ADVISORS
O
Discoverthe5Tenetstomakeyouropen
networkvisionareality
EXAM PREP
Q
SearchSearch
21/11/2015
TUTORIALS
T
VIDEO
V
READTHE
GUIDE
Inventory Turnover
AA
You may also like: Five Chart Patterns you need to know
Next Up
RECEIVABLES TURNOVER
RATIO
OVERALL TURNOVER
Sign Up
Learn More
VIDEO
HOT DEFINITIONS
Discount Bond
Conglomerate
Brand Identity
Modernizeyour
datacenter
Discoverthe5Tenetstomakeyour
opennetworkvisionareality
READTHE
GUIDE
High inventory levels are unhealthy because they represent an investment with a rate of
http://www.investopedia.com/terms/i/inventoryturnover.asp?layout=orig
Trading Center
1/5
21/11/2015
InventoryTurnoverDefinition|Investopedia
return of zero. It also opens the company up to trouble should prices begin to fall.
For more details, check out "How
"How do I calculate the inventory turnover ratio?"
ratio?"
Things to Remember
A low turnover is usually a bad sign because products tend to deteriorate as they sit in a
warehouse.
Companies selling perishable items have very high turnover.
For more accurate inventory turnover figures, the average inventory figure, ((beginning
inventory + ending inventory)/2), is used when computing inventory turnover.
Average inventory accounts for any seasonality effects on the ratio.
Refine Your Financial Vocabulary
Gain the Financial Knowledge You Need to Succeed. Investopedias FREE Term of the Day
helps you gain a better understanding of all things financial with technical and easy-tounderstand explanations. Click here to begin developing your financial language with this
daily newsletter.
Trading Center
Small Investment
Options
Invest in best SIP plans in
just 2 Mins & avail high
returns.
Small Investment
Options
Invest in best SIP plans in
just 2 Mins & avail high
returns.
Partner Links
RELATED TERMS
Receivables Turnover Ratio
Overall Turnover
Inventory Write-Off
Ads
Top SIP Investment plans
www.myuniverse.co.in/ZipSIP
Compare & invest in best Funds. 0 paper work. Start today.
Free Trial Intraday Tips
beststockanalysis.co.in/FreeTrial
Get 1 Solid Profitable Idea Daily. Upto 90% Accuracy. Try It Yourself
RELATED ARTICLES
STOCK ANALYSIS
TECHNICAL INDICATORS
INVESTING BASICS
http://www.investopedia.com/terms/i/inventoryturnover.asp?layout=orig
2/5
21/11/2015
InventoryTurnoverDefinition|Investopedia
INVESTING
FUNDAMENTAL ANALYSIS
FUNDAMENTAL ANALYSIS
INVESTING
FUNDAMENTAL ANALYSIS
FUNDAMENTAL ANALYSIS
INVESTING BASICS
RELATED FAQS
Q: What is the formula for calculating the inventory turnover ratio in Excel?
A: The inventory turnover ratio is used in fundamental analysis to determine the amount of times a
company sells and replaces ... Read Full Answer >>
Q: What are some important financial ratios to evaluate with respect to consumer packaged ...
A: Since companies that sell consumer packaged goods are traditionally low-margin, high-volume
businesses, the most important ... Read Full Answer >>
Q: How does the use of International Financial Reporting Standards (IFRS) affect key ...
A: While much has been achieved since 2002 in convergence between international financial reporting
standards (IFRS) and U.S. ... Read Full Answer >>
http://www.investopedia.com/terms/i/inventoryturnover.asp?layout=orig
3/5
21/11/2015
InventoryTurnoverDefinition|Investopedia
Q: What does the book-to-bill ratio in the electronics sector refer to?
A: The collection and analysis of data can significantly complement and enhance operations management,
leading to increased ... Read Full Answer >>
Q: How does inventory turnover affect the cash conversion cycle (CCC)?
A: A higher, or quicker, inventory turnover decreases the cash conversion cycle (CCC). A lower, or
slower, inventory turnover ... Read Full Answer >>
Q: What are the generally accepted accounting principles for inventory reserves?
A: As with most matters related to generally accepted accounting principles (GAAP), accountants
assigned with the task of applying ... Read Full Answer >>
Q: Why is it sometimes better to use an average inventory figure when calculating the ...
A: Inventory turnover is an important metric for evaluating how efficiently a firm turns its inventory into
sales. For a couple ... Read Full Answer >>
BROWSE BY TOPIC:
Accounting
Balance Sheet
Financial Statements
Fundamental Analysis
Systematic Investing
To Move From 50,000
To 1 Crore In 10 Years
bigdecisions.com | Smarter
decisions | Financial tools |
Blog
scripbox
http://www.investopedia.com/terms/i/inventoryturnover.asp?layout=orig
4/5
21/11/2015
InventoryTurnoverDefinition|Investopedia
YourSingapore.com
Create an ocean of
money when you just
have drops of cash
Mansion Global
scripbox
Recommendedby
Search Investopedia
DICTIONARY:
CONTENT LIBRARY
Articles
Terms
Symbol
Tutorials
Slideshows
Stock Simulator
FXtrader
FAQs
Calculators
Chart Advisor
Stock Analysis
Advertise With Us
Write For Us
Email Deployment
Contact Us
Careers
2015, Investopedia, LLC. All Rights Reserved Terms Of Use Privacy Policy
http://www.investopedia.com/terms/i/inventoryturnover.asp?layout=orig
5/5