Balance Sheet & Working Capital
Inventory Turnover
Turns the days stock takes to be sold or consumed into a read on operating efficiency and liquidity consumption. It shows whether growth is collected, trapped in stock or financed by delaying payments.
Inventory Turnover
inventoryTurnover · Balance Sheet & Working Capital
- Definition
- Turns the days stock takes to be sold or consumed into a read on operating efficiency and liquidity consumption. It shows whether growth is collected, trapped in stock or financed by delaying payments.
- Calculation
- Cost of revenue / average inventory.
- Uses
- Very useful in retail, distribution, industrials, hardware, autos and businesses with inventory or customer credit. Less useful in pure software, advance-payment platforms and financials. Cross-check growth, gross margin, CFO, DSO, DIO, DPO and cash conversion cycle.
