Meaning of ratio

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 October 2011 HI

RESPECTED MEMBBER

I WANT TO KNOW MEANING OF INVENTORY TURNOVER RATIO?

WHAT IS GOOD FOR COMPANY WHETHER IT SHOULD BE HIGH OR LOW?

WHAT IS CONSEQUENCES OF HIGH AND LOW TURNOVER RATIO?

FOR GOOD COMPANY PERFORMANCE WHAT SHOULD BE THERE HIGH OR LOW?

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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11 October 2011 It is a ratio which shows how many times a company's inventory is sold and replaced over a period

Formula is COGS/AVERAGE INVENTORY.

Inventory Turnover ratio should be high for a company.Low indicates that sales of the company is poor and over stocking which may result in obsolescence and increased inventory management cost.High indicates strong sales.