Question

In inventory turnover calculation what is taken in the numerator

Answer 1

Answer:

The Inventory Turnover Ratio is Cost of Goods Sold divided by average Inventory. Let's illustrate the ratio with the following amounts: Sales for the year $800,000; Cost of Goods Sold for the year $600,000; Inventory (average amount at cost during the year) $200,000.

Answer 2

Answer:

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period. A company can then divide the days in the period by the inventory turnover formula to calculate the days it takes to sell the inventory on hand.