What is inventory turnover rate and why is it important?
An example of an AI chatbot conversation about inventory turnover rate and its significance in business.
What is inventory turnover rate and why is it important?
Inventory turnover rate measures how often inventory is sold and replaced over a period. It's crucial for assessing efficiency.
How do you calculate the inventory turnover rate?
You calculate it by dividing the cost of goods sold (COGS) by the average inventory during a specific period.
What is a good inventory turnover rate?
A good inventory turnover rate varies by industry, but generally, a rate of 5-10 is considered healthy.
What happens if the inventory turnover rate is too low?
A low inventory turnover rate may indicate overstocking, poor sales, or obsolete inventory, leading to increased holding costs.
Can you suggest ways to improve inventory turnover?
Sure! You can improve it by optimizing stock levels, enhancing sales strategies, and regularly reviewing inventory performance.
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