Inventory turnover rate is one of the important indexes of enterprise operation ability analysis, which is widely used in enterprise management decision. Inventory turnover rate can be used not only to measure the efficiency of inventory operation in all aspects of enterprise production and operation, but also to evaluate the operating performance of enterprises and reflect their performance.

Inventory turnover rate (times) = cost of sales/average inventory balance? (There is also a formula for calculating the inventory turnover rate.

Inventory turnover rate (times) = operating income/average inventory balance, mainly used for profitability analysis)

Where: average inventory balance = (beginning inventory+ending inventory) ÷2, inventory turnover days = calculation period days/inventory turnover rate (times)

Namely:

Inventory turnover days = (opening inventory+ending inventory) ÷2* calculation days ÷ sales cost

or

Inventory turnover days = calculation days * (opening inventory+ending inventory) ÷2÷ cost of sales