Inventory Performance, Cost and Value Measures

Inventory Turn Rate Computations

Turns at Retail = (Annual Sales at Retail)/(Average Inventory Value) If the annual sales for a corporation is $200,000,000 per year and the average inventory value is $50,000,000 then the turn ratio at retail is $200,000,000/$50,000,000 = 4.0. Turns at Cost = (Annual Sales at Cost)/(Average Inventory Value) If the annual sales at cost (cost of goods sold) for a corporation is $100,000,000 per year and the average inventory value is $50,000,000 then the turn ratio at cost is $100,000,000/$50,000,000 = 2.0. Unit Inventory Turns = (Annual Units Shipped)/(Average Units in Inventory) If the annual number of units shipped from a warehouse is 2,000,000 and the average number of units in inventory is 400,000 then the unit inventory turn ratio is 2,000,000/400,000 = 5.0.

RightChain™ Incorporated

14

Copyright and Confidential | All Rights Reserved