Inventory turns Michael Samojla

There are a variety of formulas for evaluating the effectiveness of the

inventory system; the most frequently used is calculating the number of inventory turnovers within a year. This number should indicate, in general, how frequently during the year the complete value of the inventory is sold and repurchased. The lower this number, the longer the time purchased stock remains on the shelf and ties up financial resources. Considering the concept of ‘just-in time,’ ordering, inventory would ideally be turning weekly. This is not possible; but the point is—the higher the number of inventory turns, the more profitable the business.