This calculator requires the use of Javascript enabled and capable browsers. This script is one of several termed as operational ratios. This measures the effectiveness to frequently turn the sales inventory annually, as well as the buying and purchase guidelines; it can also be a flag as to what is in inventory. Is the inventory such that you can sell it; is it obsolete? Enter the annual average of the inventory value. Enter the annual cost of sales from inventory value, including cost of inventory, markdowns, losses, scapped items, warranty reductions, excluding all non-inventory sales. Finally click on Calculate to see the turnover ratio. Though not true for all businesses, the inventory sold should turn at least 4 times annually; that is a ratio of 4 to 1. The more times inventory turns over annually, the more profit you should make. Be aware that this is NOT the same as AR rollover or turnover. See our Detailed Inventory Turnover Ratio Calculator.
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