The various inventory turnover ratios show how quickly (or how long) it takes to produce and sell goods by measuring how long the goods are sitting in inventory. There are 3 different ratios comparing a firm's inventories with the cost of goods sold, and any of them can be used to see these trends.
In general a firm will want to quickly turn inventory into cash, so the firm will want to maximize or increase Inventory Turnover and minimize or decrease the Days in Inventory and Inventory to Cost of Sales ratios.
Note that the inventory at the start of the year is typically obtained from using the figure at the end of the previous year. Also, this calculator uses a 365 day year--some prefer to calculate this based on a 360 day year.
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