19.2.4.a. Inventory Turnover Ratio Formula

Try these first

1. 1.

   What is the formula for the Inventory Turnover Ratio?

   Hint

   Think about how inventory relates to sales.

2. 2.

   What does a higher inventory turnover ratio indicate?

   Hint

   It has to do with how quickly inventory is moving.

3. 3.

   What is the Inventory Turnover Ratio formula?

   Hint

   Remember how inventory relates to sales speed.

4. 4.

   True or False: A higher inventory turnover ratio is always preferred.

   • True
   • False

   Hint

   Consider the balance required in inventory management.

5. 5.

   A fashion retailer had a COGS of $400,000 and average inventory of$100,000. Calculate their inventory turnover ratio and interpret what it indicates about their inventory management.

   Hint

   Use the ITR formula and reflect on what a 4 means in context.

6. 6.

   Discuss a company scenario where the inventory turnover ratio is low, such as in seasonal industries. What strategies could they implement to improve the ratio?

   Hint

   Think of how seasonal demand affects inventory and how to plan around it.