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OPTIMAL INVENTORY TURNOVER

OVERVIEW

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.

The Tool

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. 

Instructions

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

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Managing Inventory Turnover - A Key Operational Strategy for Retailers

Gain insight into the importance of Inventory Turnover through this featured article in ABL Advisor.

HOW CAN WE HELP YOU OPTIMIZE OR MAXIMIZE A SMALL BUSINESS?​

ATLANTA

10945 State Bridge Road

Suite 401-213
Alpharetta, GA 30022

Phone: 770.744.0753

Email: Info@FortisBA.com

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