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Learning to Invest / Reading Financial Statements


Subject:  Re: Inventory Turnover formula Date:  6/7/2000  10:38 PM
Author:  thalseth Number:  1126 of 3984


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.

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