Financial management

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HUSSAIN BEE SHAIK (Querist)
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14 April 2010 Higher inventory turnover is most beneficial or lower is better. Ex: Company A has ITR=10 Company B has ITR=12 which company is better.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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14 April 2010 Stock Turnover Ratio = Cost of Goods Sold/Average Stock
ITR-A= 10 times
ITR-B = 12 times
Analysis:- Stock turnover ratio shows that every rupee invested in stock has been used to achieve more sales. A firm with high ratio can sell even at a low margin.A higher ratio indicates that the firm is making higher sales and that it’s storage cost is low.

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