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What is inventory turnover ? What is LCNRV ? What is day sales inventory ?

  1. What is inventory turnover ?

What is LCNRV ?

What is day sales inventory ?

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Answer #1

Inventory turnover means the ratio which is calculated by dividing the cost of goods sold for a given period with the average inventory of the period. This ratio measures how efficiently a company is able to control it's inventory so as to boost it's profit.

LCNRV means Lower of Cost or Net realisable value which is used to Value the inventory at the end of the period. This method calculates the inventory valuation on the basis of cost or net realizable value which the company will get if it sells the product in the market.

Days sales inventory is calculated by dividing average inventory with the cost of goods sold multiplied by the number of days in the period. This ratio indicates the average time that a company takes to convert it's inventory into sales.

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