S

Calculation method a

Your data

COGS - Cost of goods sold

Your result

Benchmark - North American B

25%th percentile

Raw material stock

WIP - Work in process
Finished goods stock
Total inventory

5
7.5
6
4

Formula of Stock Turnover/Inventory Turnover Ratio:

The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost.
(a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost]
45.00
40.00
35.00
30.00

Raw
WIP proc
Finis
stoc

25.00
20.00
15.00
10.00
5.00
0.00
25%th percentile

Body Mass Index

of your company

Median
Your result

75% percentile

Amount of dead stock

Amount of potential dead stock
SUM of slow moving stock
Total Inventory

STOCK TURN CALCULATION

k - North American Benchmark & Outlook 2007

Median

75% percentile

10
15.6
12
7

18
40.3
24
13.1

Generally, the cost of goods sold may not be known from the
inventory turnover ratio may be calculated by dividing net sa
known then inventory at selling price may be taken as the de
closing inventory figure may be taken as the average invento

age stock at cost.

y at cost]

(b) [Inventory Turnover Ratio = Net Sales / Average In

(c) [Inventory Turnover Ratio = Net Sales / Average in
(d) [Inventory Turnover Ratio = Net Sales / Inventory

Raw material stock

WIP - Work in
process
Finished goods
stock

Significance of Inventory Turnover Ratio:

Inventory turnover ratio measures the velocity of conversion
indicates efficient management of inventory because more fr
required to finance the inventory. A low inventory turnover ra
inventory turnover implies over-investment in inventories, du
accumulation of obsolete and slow moving goods and low pro
is also an index of profitability, where a high ratio signifies m
inventory turnover ratio may not be accompanied by relative
under-investment in inventories.

Source: http://www.accountingformanagement.com/stock_tur

Definition: No movement in stock in 12 month

Definition: Stock larger than 24 months of sale
Definition: Total inventory

LATION
Calculation method b + c + d

Your data

Your result

Net sales

Average inventory at cost

Average inventory at selling price
Total inventory

0
0
0

the cost of goods sold may not be known from the published financial statements. In such circumstances, the
urnover ratio may be calculated by dividing net sales by average inventory at cost. If average inventory at cost is
n inventory at selling price may be taken as the denominator and where the opening inventory is also not known t
entory figure may be taken as the average inventory.

ntory Turnover Ratio = Net Sales / Average Inventory at Cost]

ntory Turnover Ratio = Net Sales / Average inventory at Selling Price]
ntory Turnover Ratio = Net Sales / Inventory]

ce of Inventory Turnover Ratio:

urnover ratio measures the velocity of conversion of stock into sales. Usually a high inventory turnover/stock velo
fficient management of inventory because more frequently the stocks are sold, the lesser amount of money is
finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. A low
urnover implies over-investment in inventories, dull business, poor quality of goods, stock accumulation,
on of obsolete and slow moving goods and low profits as compared to total investment. The inventory turnover ra
ndex of profitability, where a high ratio signifies more profit, a low ratio signifies low profit. Sometimes, a high
urnover ratio may not be accompanied by relatively a high profits. Similarly a high turnover ratio may be due to
stment in inventories.

p://www.accountingformanagement.com/stock_turn_over_ratio.htm

Your Body Mas

0
0
0
0

rcumstances, the
e inventory at cost is not
ry is also not known the

y turnover/stock velocity
mount of money is
inventory. A low
cumulation,
inventory turnover ratio
ometimes, a high
ratio may be due to

Your Body Mass Index

<5%

As a rule of thumb the

BMI in this calculation
should not exceed 5%.