How to Define an Inventory Turn

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Inventory turn is used to measure the efficiency of a business by looking at the number of time inventory has been bought and sold. Find out more about inventory turn, and how it looks at beginning and ending balances in inventory, with information from a certified public accountant in this free video on accounting terms.

Part of the Video Series: Business & Accounting Terms
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Video Transcript

Let's talk about inventory turn. In measuring the efficiency of our business, one of the measurement tools that we use is the inventory turn. We look at the number of units and the dollars we spent on inventory that we purchase for resale. And we calculate based on the beginning and the ending balances in inventory, the number of times that we purchase and sold that inventory. Efficiency would dictate that we have a turn which is high as possible; which means that capital is not tied up in the, in the ownership of that inventory for too long a time.


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