What your inventory turnover ratio can tell you

Why do we use it?

The inventory turnover ratio shows how effectively your inventory is managed. It reflects the two main components of a company's performance: stock purchase and sales.

What is the inventory turnover ratio?

The inventory turnover ratio is a measure of how many times your average inventory is "turned" or sold in a certain period of time. Put simply, the inventory turnover ratio indicates how many times you have managed to sell your entire stock in a year.

Who needs this information?

This information is useful to shareholders and business analysts, because the turnover ratio indicates the company's ability to sell its products. Inventory is any store's greatest asset and is often put up as collateral for loans, so creditors and banks are also very interested in knowing how easily the goods can be sold.

need for turnover ratio

Calculate your Inventory Turnover ratio here

Cost of Goods Sold

Beginning Inventory

Ending Inventory

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Strategies to improve sales of slow-moving products

Identify and markdown old products that are obsolete or no longer trending
Introduce discounts and product giveaways
Conduct contests and offer deals on social networks
Find ways to turn extra inventory into a tax write-off

Manage your inventory efficiently with Zoho Inventory

Try Zoho Inventory now
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