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Inventory turnover ratio interpretation

18 October 2021

my honourable persons could you please tell me what is mean by inventory turnover ratio then how to calculate the inventory turnover ratio why the companies are using the inventory turnover ratio

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12 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 October 2021

Inventory/material cost of sales or revenue = days. It tells us, how efficiently material was purchased, converted and sold. The lower the number of days, the better

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MPR Sanjay Kumar (2973 Points)
Replied 18 October 2021

My dear sir ,I need deep interpretation clear

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 October 2021

Inventory turnover ratio gives the number of days it took the owner to buy, manufacture and sell. It shows how many times owner purchased and sold inventory. Lots of other versions online google

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MPR Sanjay Kumar (2973 Points)
Replied 18 October 2021

Oh ok sir 👍 thank you very much my honourable sir............very useful...........forumala of inventory turnover ratio??

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 October 2021

Better than google, read working capital chapter in your finance text books, good explanation will be given

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MPR Sanjay Kumar (2973 Points)
Replied 18 October 2021

Thank you 😊 sir 👍👍👍😊

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 18 October 2021

Agree with yasaswi

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (3293 Points)
Replied 18 October 2021

Working capital is used to fund operations and meet short-term obligations. If a company has enough working capital, it can continue to pay its employees and suppliers and meet other obligations, such as interest payments and taxes, even if it runs into cash flow challenges. so working capital analysis is a heart of the management of a company

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