What is inventory turnover?

Accounting Dec 18, 2020

Expert Solution

Inventory turnover is how quickly the inventory in a business is sold and restocked. The inventory turnover ratio is found by dividing sales by the average inventory over a period. This formula can be used to see how many days inventory sits on shelves before it is usually sold. If a business has a very low turnover, it may suggest that it does not have the ability to get cash to handle changes in the market effectively.

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