Inventory Turnover and Average Inventory pocessing periodSol

Inventory Turnover and Average Inventory pocessing period?

Solution

Inventory turnover is a ratio which shows how many times an organization\'s inventory is sold and replaced over a period of time. It measures how fast an organization is selling inventory.  It is calculated as sales divided by average inventory.

Average inventory processing period is measured by dividing days in a year by inventory turnover i.e.

(365/inventory turnover)