No. of Recommendations: 0

The most accurate inventory turnover is based on COGS, not sales, which are stated at market prices. The inventory is carried at cost, which correlates with COGS. If sales are used, it overstates the calculated turnover. Additionally, the inventory should be averaged and not just use the one figure from the balance sheet.

I hope this helps.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.