What is ideal inventory turnover ratio? |Accounting | Solutioninn.com
Learn more about Inventory turn-over ratio on https://www.solutioninn.com/study-hel...
This is an important ratio to assess the operational efficiency of a business. Generally it is a good sign for a business to have its inventory sold quickly. A high inventory turnover ratio shows that the inventory is sold more times in a period, which means that the goods are of good quality, the production department and sales departments are putting good efforts to fuel up the speedy sales. On the other hand a lower inventory turnover means that the inventory is not selling with as much frequency as it should be. This could point out different causes of slow inventory sales like the inventory production process is slower and it takes a long time to get ready for sales.