Covering Financial Ratios: Day 2 Today's focus is on the Inventory Turnover Ratio. ? What is Inventory Turnover Ratio? The Inventory Turnover Ratio is a crucial financial metric that assesses how frequently a company sells and replenishes its inventory within a specific timeframe. It serves as a measure of inventory management efficiency, shedding light on whether a business experiences robust sales or maintains excess stock. ? Why It Matters - Identifies overstocking to enhance cash flow. - Informs decisions on pricing, procurement, and marketing strategies. - Showcases inventory efficiency and overall business well-being. ? Ideal Ratio The "ideal" inventory turnover ratio varies across industries: - Fast-moving consumer goods (FMCG): High turnover (e.g., 8–12 times) - Luxury or durable goods: Lower turnover (e.g., 2–4 times) Understanding and utilizing the Inventory Turnover Ratio is essential for businesses to optimize their operations and make informed strategic choices. #FinancialRatios #InventoryManagement