Inventory Turnover Ratio | Explained with Example

What is the Inventory Turnover Ratio? What is the formula for calculating the Inventory Turnover Ratio? How do you calculate it? How do you analyze/interpret the Inventory Turnover Ration?
In this lesson, we explain what the Inventory Turnover Ratio is and go through the formula and a clear example of how to calculate it.
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[@urbanlegend587]

I was in tears trying to figure this out and you just broke it down for me so easily I thank you so much!

[@christinalang4238]

Absolutely LOVE THIS VIDEO...so easy to understand!!!!!

[@capt.redbeard8361]

Thanks for the explanation - very cool to find tutorials with some South African examples :)

[@heir8095]

This is exactly what I needed, thanks!

[@arjungoud3450]

Excellent for me. Thanks a lot.

[@whengtapiccapa4155]

Thank you so much. It is easier to understand through your explanation than my.... thanks a lot. You helped me much.

[@mohaumokhethi8625]

Your a great teacher I understand this in one of your videos compared to 5 lectures .

[@Thorin632]

perfect explanation. Thanks man

[@fredrickotieno1856]

Thank you well explained. Saved me hours of reading.

[@warn9171]

Very helpful thank you

[@firstreviewer8966]

You did a good job explaining this concept. Thank you very much, and keep up the good works. FR

[@JohnKirwai-jk2qk]

Thank you so much I understand it perfectly 🙏

[@CorruptNeo]

Thank you bro

[@sibusisofaya7874]

Thank you.

[@zeze9062]

Thanks a lot!!

[@kr3shred691]

Great job.

[@akankshabarve8683]

clear sir thank u somuch

[@rkolaj3772]

Thanks 🙏🏾

[@marthadelossantos3918]

Good💯I liked your explanation📓✏

[@chaoyang9309]

You are the best..! Not like some genius try hard on it

[@user-fh9le5co7q]

thanks for the explanation, but i have question, what is the difference between the formula you talk about and the formula that says sales\inventories? i had to work on project but i get confused because now i have two inventory turnover formulas.

[@Mukesh-ne3yj]

nice video

[@olabisinurain3302]

Thanks for the information. How do we calculate average inventory when only one inventory is given?

[@mohamedamr1159]

I guess then u should consider this only inventory given as the average inventory

[@rheavillanueva3610]

Thank you keep it up. But whats the passing score?

[@oiziridayana9259]

What explanation can we give to a decrease in the inventory times ?

[@siminanizami1150]

can we do the same calculations for year 2017? formulas will be the same? thank you

[@khenmiranda4758]

great! what if i only do 10days not a years on selling? what ratio is that

[@samsonakinyemi3530]

How do you recognize COGs for a service rendering company

[@sumasreepeetha9410]

In the question they gave inventory velocity 4months then how can I calculate the velocity turn over ratio. There is no opening stock and closing stock.they gave only the closing stock is 30000 more than opening stock.

[@Mukesh-ne3yj]

How to find the information of Inventory valuation policy (policies) in annual report?

[@esu8619]

Hello, thanks for the content. I have a question, in the financial statement I am viewing, the cost of goods sold is negative, do I use this as negative or do I convert it to positive before calculating the inventory turnover ratio?

[@Counttuts]

You use the cost of goods sold as if it is positive on the formula.

[@esu8619]

@@Counttuts Thank you.

[@m6n15]

If I need to look at it quarterly (Jan-Mar) and so on...,do you take the ending inventory in Jan + beginning inventory in March and divide by 2?

[@Counttuts]

You take the ending inventory in December of the previous year + the ending inventory in March and then divide by 2

[@ICXCNIKA_33]

Great example! It helped me a lot with my homework :)

[@Nicole-ml8ty]

What if it is only one inventory? The merchandising inventory?

[@regularbloke7410]

why average inventory is the sum of opening inventory and closing inventory ?

[@nightking9435]

What happens when the price of the product changes... For example, the cost of goods sold has increase... Hpw do we calculate the turn over ratio then?

[@ahmedabad1981]

To estimate inventory we apply LCM or LCNRV witch means lower cost or market value witch means in summery we record the inventory cost at the lower cost whether the actual cost or the market cost now