Online Calculators for Business & Investment
Efficiency ratios allow measurement of how well management operates this business; that is, how efficient they are in particular areas.
One efficiency ratio we have is the Inventory Turnover. This ratio measures how many times in a given period a business is able to sell its average inventory level.
It is obvious to know that a business wants to sell its inventory as quick as possible and not leave it sitting on the shelf, so to speak. So the Inventory Turnover tells us how many times a business sells its inventory, replaces it and sells it again and so on.
A calculation of, say, 8.9 can be interpreted as the business has stocked the shelves of inventory and completely sold out 8.9 times over. While the figure uses average inventory (that is, a business normally orders different levels of inventory over the period, etc.) the COGS figure should be very accurate and therefore ‘8.9 times’ can be used as a good benchmark.
Inventory Turnover Calculator
The calculator asks for:
Cost of Sales (COGS), which is found in the Income Statement.
Inventory at the Start of Period, which is found in the previous Balance Sheet.
Inventory at the End of Period, which is found in the current Balance Sheet.