inventory turnover

Popular Terms
Number of times a firm's investment in inventory is recouped during an accounting period. Normally a high number indicates a greater sales efficiency and a lower risk of loss through un-saleable stock. However, an inventory turnover that is out of proportion to industry norms may suggest losses due to shortages, and poor customer-service. The preferred method of computing inventory turnover is to compare the cost of sales (also called Cost Of Goods Sold or COGS) to average inventory (Cost of sales รท Average inventory). Another method, which compares net sales revenue to the inventory (Net sales revenue รท Inventory) is also used but it introduces the distortion of sales markup that is not documented in the inventory records.
Also called inventory turns or stock turnover.

Use 'inventory turnover' in a Sentence

I saw that our inventory turnover was good and that made me relived because I was worried about if for a bit.
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When you have a high inventory turnover you need to make sure that your factory can put out enough of your product.
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If you have a high inventory turnover that is very likely a good thing because it means your products are flying off the shelves.
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