Sep 10, 2025 · Inventory turnover ratio measures how efficiently a company uses its inventory by dividing the cost of goods sold by the average inventory value during a set period.

You can calculate the inventory turnover ratio by dividing the inventory days ratio by 365 and flipping the ratio. In this example, the inventory turnover ratio = 1 / (73/365) = 5.

Jun 27, 2025 · To find your inventory turnover ratio, use this formula: Inventory turnover ratio = Cost of goods sold ÷ Average inventory. A higher ratio means your products sell quickly or you’re keeping …

Nov 14, 2025 · Annual cost of goods sold ÷ Inventory = Inventory turnover. A more refined measurement is to exclude direct labor and overhead from the annual cost of goods sold in the numerator of the …

Nov 13, 2024 · As shown in the example above for ABC Company, you would calculate the inventory turnover ratio by dividing $40,000 (COGS amount) by $15,000 (average inventory) for a total of 2.67. …

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. Master the essentials of financial planning and analysis with our comprehensive course. Delve into key topics such as capital …

Aug 8, 2025 · Inventory turnover is the rate at which you sell and replace inventory within a given period of time. The basic calculation is the cost of goods sold (COGS) divided by average inventory: Cost of …