Inventory turnover ratio
Inventory turnover ratio (or, simply, inventory turnover) is an asset management ratio that indicates how quickly inventory moves off the shelf and therefore how well a company sells its product.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Inventory turnover ratio. An asset management ratio that indicates how quickly inventory moves off the shelf and therefore how well a company sells its product.
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Inventory turnover ratio. Sales divided by inventories.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Inventory turnover ratio. This ratio is calculated by dividing sales by inventories. It indicates how many times inventory is turned over during the year.
According to Managerial Accounting by Braun, Tietz (5th edition),
- Inventory turnover ratio. Ratio of cost of goods sold to average inventory. It indicates how rapidly inventory is sold, 850, 860 Investing activities. Activities that involve buying or selling long-term assets, such as buying or selling property, plant, or equipment; buying or selling stock in other companies (if the stock is meant to be held for the long term); or loaning money to other companies with the goal of earning interest income from the loan.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
