Why is it desirable to increase a company’s inventory turnover ratio?
It is desirable to increase its inventory turnover ratio to achieve more sales from a specific amount of inventory.
The inventory turnover ratio signifies how fastly goods that come into storage or warehouse facilities leave storage facilities. The financial metrics signify how many times throughout a particular period the company converts its inventory into cash for the business.
Inventory turnover ratio= cost of goods sold x 2/ (Beginning inventory +Final inventory)
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