OPTIMAL INVENTORY TURNOVER
As the climate becomes progressively more challenging for retailers and other inventory-driven businesses, to remain competitive increased focus on inventory turnover as a key performance indicator is becoming more imperative. This is especially true for small businesses trying to compete with much larger and efficiently scaled competitors shifting focus to online and omnichannel revenue streams with lower pricing models. Inventory-driven small businesses can stay competitive through a combined strategy of maximum profitability with optimal inventory turnover.
Through an in-depth key metric analysis, the Optimal Inventory Turnover Tool gives insight into a business's optimal inventory turnover as it compares to its current inventory turnover, with insight into effective adjustments to close the gap. The closer a business is, or can get to, its optimal inventory turnover level, the better the chance that the business will stay profitable with balanced inventory levels, and ensure that cash is not tied-up into too much inventory or slow-moving and sluggish inventory.
The input data is found in the business's financial statements. Any range of data can be used as long as the financial reporting dates remain consistent.
Total Sales - Income Statement
Cost of Goods Sold - Income Statement
Current Inventory - Current Balance Sheet
Previous Inventory - Year-ending or Quarter-Ending Balance Sheet