Ratios: Inventory Turnover definitions Flashcards
Ratios: Inventory Turnover definitions
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Inventory Turnover Ratio
Efficiency metric showing how many times average inventory is converted into cost of goods sold during a period. Cost of Goods Sold
Total expense incurred to produce or purchase goods that were sold during a specific period. Average Inventory
Mean value of inventory held, calculated by adding beginning and ending balances and dividing by two. Efficiency Ratio
Financial measure used to assess how effectively resources, such as inventory, are managed. Benchmarking
Process of comparing a company's performance metrics, like inventory turnover, to industry competitors. Warehouse Cost
Expenses associated with storing inventory, including rent, utilities, and maintenance. Beginning Inventory
Inventory balance present at the start of an accounting period, used in average inventory calculations. Ending Inventory
Inventory balance remaining at the close of an accounting period, used in average inventory calculations. Net Sales
Total revenue from sales after deducting returns, allowances, and discounts. Sales Revenue
Income generated from selling goods or services, reflecting the selling price received from customers. Inventory Management
Strategic control of inventory levels to balance sales fulfillment and minimize holding costs. Industry Comparison
Evaluation of a company's metrics, such as inventory turnover, relative to similar businesses. Resource Allocation
Distribution of assets, like inventory, to maximize operational efficiency and minimize excess. Inventory Cycle
Ongoing process of purchasing, storing, and selling inventory within a business. Inventory Balance
Monetary value of goods held in stock at a specific point in time.