The inventory turnover ratio (often referred to as ‘Turn’) is a key metric in fundamental analysis that measures how many times a company sells and replaces its inventory within a given period.
To calculate inventory turnover, divide total sales by the inventory. However, in some cases, the Periodic Hot Seller cannot compute this value. These cases include:
- No remaining inventory to divide into sales.
- A selling margin is too low to divide the remaining inventory.
When these conditions apply, the Turn value will be left blank.
Key Takeaways
- A new column, labeled ‘Turns’, has been added to the Power Spreadsheet. The inventory turnover ratio (often referred to as ‘Turn’) is a key metric in fundamental analysis that measures how many times a company sells and replaces its inventory within a given period.
- To calculate inventory turnover, divide total sales by the inventory. However, sometimes, the Periodic Hot Seller cannot compute this value. These cases include:
- There is no remaining inventory to divide into sales.
- A selling margin is too low to divide the remaining inventory.
- When these conditions apply, the Turn value will be left blank.
- The formula is sales divided by inventory.
