Buying & Selling a Business
What is the Inventory Turnover Activity ratio ?
This ratio illustrates how many times your initial inventory is replaced in a year. Cost of Goods Sold divided by Average Inventory = IT Ratio. Also Days in the year divided by the Inventory Turnover Ratio = Number of days in Inventory Ratio. Faster turnovers are viewed as a positive trend. The result is meaningful only when compared to other business's in the same industry or the same business's past inventory turnover.
Need Professional Help?
If you need help with "Buying & Selling a Business" or have other tax questions, we can help you find a local licensed tax preparer for a free, no-obligation consultation.