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    Brian Zavaleta's Avatar
    Brian Zavaleta Posts: 1, Reputation: 1
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    #1

    Sep 18, 2007, 04:56 PM
    Inventory turnover calculation
    What is the inventory turnover calculation
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Sep 18, 2007, 09:46 PM
    1) Inventory Turnover = Sales / Inventory

    or

    2) Inventory Turnover = COGS / Average Inventory

    Typically the first calculation is more common.
    West Coast Prof's Avatar
    West Coast Prof Posts: 1, Reputation: 1
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    #3

    Apr 7, 2013, 07:22 PM
    Actually the typical answer is COGS / Average Inventory. Sales relates to the retail price of inventory. COGS and Inventory are expressed at cost or purchase price. It is also to remember to use Average Inventory to adjust for any changes in inventory during the accounting period. Using Ending Inventory can distort the turnover when there are significant increases or decreases in inventory during the accounting period.
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