Inventory Turnover Ratio - Meaning, Formula, Calculation & Interpretations
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- เผยแพร่เมื่อ 5 ก.ย. 2024
- This tutorial provides a comprehensive overview of the Inventory Turnover ratio, including its meaning, formula, calculations, and interpretation. Using a practical colgate case study example, we will learn how to calculate this inventory turnover ratio in excel.
You can download the Colgate Inventory Turnover Ratio template from this link - www.wallstreet...
What is Inventory Turnover Ratio?
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The Inventory Turnover Ratio examines how quickly a company replaces its current inventory and converts it into sales. A higher ratio means the company's product is in high demand and sells quickly, resulting in fewer inventory management costs and more profits.
Formula
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Inventory Turnover Ratio Formula = Cost of Goods Sold / Average Inventory
Interpretation of Inventory Turnover Ratio
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- High Inventory Turnover Ratio - This indicates that the company has done a good job of managing its inventory, with lower holding costs and fewer risks of obsolescence.
- Low Inventory Turnover Ratio - This implies that the company's products aren't frequently sold in the market, and its inventory becomes slow-moving, resulting in higher inventory costs and lower earnings.
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Your interpretation of the Inventory turnover ratio was very comprehensive. Also, the Colgate case study was very easy to understand.
Thank you!
Download the Colgate inventory turnover ratio excel template used in this video from this link - www.wallstreetmojo.com/ratio-analysis-template/
Just found this video and it helped me understand better with industry analysis.
Thank you.
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Nice and interesting video. Great explanation with step by step example.
Many thanks!
Very informative tutorial.Thank you.
You are welcome!
Amazing video with detailed information to it.
I come from science background. But it are very easy to understand. Thank you very much sir. Please post a video on Free Cash flow and how to calculate reinvestment ratio, ROCE
So, beg Inventory and end inventory are just blips in time measurements?
And the average of the inventory is a measure of cost value or retail value?
Thanks, nice video.
very interesting video
Glad you liked it
Please help
Inventory turnover ratio = Cogs/ Avg Inventory , how this formula derived and comes to conclusion company efficiently sells its inventory.
Good 👍
Appreciate your feedback, more content coming soon!
can inventory turnover be measured in weeks?
great video really ... but for sorry I can't download the file .. i put my email and press download but the download didn't start
Nice explanations