Inventory turnover ratio
Inventory turnover ratio (or, simply, inventory turnover) is an asset management ratio that indicates how quickly inventory moves off the shelf and therefore how well a company sells its product.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Inventory turnover ratio. An asset management ratio that indicates how quickly inventory moves off the shelf and therefore how well a company sells its product.
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Inventory turnover ratio. Sales divided by inventories.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Inventory turnover ratio. This ratio is calculated by dividing sales by inventories. It indicates how many times inventory is turned over during the year.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
