However, higher inventory turnover ratios are generally considered better because it indicates that a business sells its inventory quickly and efficiently. No ideal inventory turnover rate applies to all businesses, as it depends on various factors such as industry, product type and availability, lead times, and company size. In contrast, a low inventory ratio migh indicate that a company is not effectively managing its inventory, which can result in increased holding costs and reduced profitability. A high inventory turnover ratio means a company sells its inventory quickly and efficiently. The inventory turnover ratio measures a business's efficiency and how it manages its inventory. The average inventory is calculated by adding the beginning and ending inventory values for a given period and dividing the sum by two.

Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory To calculate inventory turnover ratio formula: It is calculated by dividing the cost of goods sold (COGS) by the average inventory value for the same period. The inventory turnover ratio, also known as the stock turnover ratio, is a financial metric that measures how many times a company has sold and replaced its inventory during a given period. This article will explore the art of higher inventory turnover and provide 14 easy strategies to achieve it. Selling inventory quickly is key to generating revenue, managing cash flow, and improving customer satisfaction.

Image Courtesy: If you are a wholesaler, then inventory turnover is a critical metric for the success of your business.

High inventory turns