![]() ![]() If you offer a time-sensitive product, such as food, fashion, and periodicals, then a high turnover ratio is a particularly important indicator.īut very high turnover ratios can also raise questions for your company: When inventory turnover is high, profitability generally improves relative to the company’s fixed costs like salaries and rent.įurthermore, the decrease in holding costs improves net income, assuming that margins remain unchanged. It also means the business has less capital tied up in goods. Should inventory turnover be high or low?īusinesses aim for a high turnover ratio because it shows strong sales. ![]()
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