How we can increase inventory turnover?

Question

Vidyut Chandra Patange · Answer

the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year.

Reducing holding cost increases net income and profitability as long as the revenue from selling the item remains constant.

The formula for inventory turnover:

$\mbox{Inventory Turnover}=\frac{\mbox{Cost of Goods Sold}}{\mbox{Average Inventory}}$

The most basic formula for average inventory:

$\mbox{Average Inventory}=\frac{\mbox{Beginning inventory+Ending inventory}}{\mbox{2}}$

The average days to sell the inventory is calculated as follows:[1]

$\mbox{Average days to sell the inventory}=\frac{\mbox{365 days}}{\mbox{Inventory Turnover Ratio}}$

zohair Siddiqui · Answer

Here are some measures:~ Increase the number of days on accounts payable and decrease the number of days on your account receivable

~ Decrease the cost of good sold

~ Maintain just in time management for all purchase orders

~ Maintain a balanced inventory based on quarterly results such as beginning Inventory-Ending Inventory/2

~ Increase sales volume per specified quarter or period

~ Manage inventory shrinkage, obsolete, damages, or reverse logistics

~Maintain general selling and administration accounts and fluctuations such as increased inflation