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Former Member

What does it mean? Inventory Turnover Analysis

Hi Expert,

I'm new to inventory management...and need your knowledge.

My question is:

1. [Days of Inventory] = -66.650

- What does this number tell me about?

- Is there any gauge for good/bad?

2. [Inventory Turnover] = -0.465

- What does this number tell me about?

- Is there any gauge for good/bad?

Regards,

Sokkorn

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2 Answers

  • Best Answer
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    Former Member
    Aug 02, 2017 at 12:31 PM

    The meaning of inventory turnover, means the number of days required inventory to be turned over into cash.

    i.e. when its inventory (in stock) the cash of yours is bound/stuck there in inventory, once the inventory is sold out/dispatched the cash is due/receivable i.e. turned into cash. So inventory turnover shows the number of days it took for an inventory to be back to cash/liquidated position.

    In my opinion, you need to see other different parameters as well before arriving at a conclusion.

    Hope this helps.

    Regards

    Iftikhar

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  • Aug 02, 2017 at 01:53 PM

    Hi,

    If inventory turn over is positive and more, then your inventory control is good and you are making money.

    Regards,

    Nagarajan

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    • Former Member

      Hi Nagarajan,

      Thank you for your comments...

      By the way, when run standard report (9.2 PL03) "Inventory Turnover Analysis", I notice that all number are negative. Is this normal?

      Regards,

      Sokkorn