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Inventory turnover

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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September 5, 2016 at 5:22 pm #337998
saqlainrattansi
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The inventory turnover formula is Inventory/Cost of sales*365
Do we use the opening or closing inventory?
Or average inventory?
September 5, 2016 at 5:57 pm #338049
John Moffat
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There is no rule – it depends on the information given.
Most sensible would be average inventory, but this is only possible if you can work out the average for both of the years we are comparing.
So usually we use the closing inventory.
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