Question

inventory turnover ratio definition and how is calculated

Answer 1

Inventory turnover ratio is defined as "how many times the entire inventory of a company has been sold during an accounting period.It shows how well a company manages its inventory levels and how often the company replenishes its inventory. In general, higher inventory turnover is better because inventories are the least liquid form of assets. A Flash report is a useful tool for measuring and managing inventory rotations."

inventory turnover ratio can be calculated usin following formulas

Inventory turnover = Sales / Inventory

Or

Inventory Turnover = Cost of good sold / Average inventory