Inventory turnover ratio / Stock turnover ratio

Last updated: 25.03.2016

Inventory turnover ratio (Stock turnover ratio) is one of the indicators of activity,  which shows how many times during the period (year) is a unit of inventories converted into revenues (i.e. is sold).

 

Calculation formula

 

Inventories are often the average from the beginning and final balance.

 

Interpretation and appropriate comparatives

can be easily derived from the text presented within the indicator of Inventory period, because Inventory turnover can be calculated by dividing the number of days in the year (365) by the formula of Inventory period.



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