We would expect the inventory turnover ratio for a luxury auto dealer to be lower than the turnover for a convenience store.
Inventory turnover is a financial ratio that demonstrates how frequently a company sells and replaces inventory over a specific time frame. The days it takes to sell the company's inventory on hand can then be determined by multiplying the number of days in the period by the inventory turnover formula.
Businesses can improve their decisions about pricing, production, marketing, and the acquisition of new inventory by calculating inventory turnover.
Inventory turnover gauges how quickly a business sells its stock. Poor sales and possibly surplus inventory, commonly known as overstocking, are indicators of low turnover. It can be a sign that the products being sold have a flaw or that there has been insufficient promotion.
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