Posted inAll sectors / Finance & Control / Financial

Inventory Turnover Ratio

Definition of this KPI:
The Inventory Turnover Ratio is a crucial financial metric used to assess how efficiently a company manages its inventory. It provides valuable insights into how quickly a company sells its inventory and replenishes it. This ratio is significant for businesses across various industries, as it affects working capital, cash flow, and overall profitability.

  • This KPI can be calculated as: Cost of Goods Sold (COGS) / Average inventory
  • The KPI will be measured as: ratio (number)
  • How to interpret the KPI: higher is better
  • The strategic objective to measure with this KPI: Financial stability
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