What is my inventory turnover time? Efficiency ratios are a great way of analysing the underlying operational efficiency of a business. Jazoodle assesses the efficiency of a company in a number of ways. Areas such as client revenue collection, or how effective its employees are in generating revenues and keeping costs at reasonable levels.
Inventory turnover time (ITT)
How do you measure the efficiency of people and processes within your organisation? The inventory turnover time is a great way of doing this, and an indicator of company efficiency. Assess this over time and compare periods. In Jazoodle, we assess and compare ITT across financial years as well as on an individual monthly basis.
What does it mean?
If stock is held for sale, a critical measure is likely to be the Inventory Turnover Ratio, or the measure of how quickly stock sells over time. The larger the measure, the older the stock is likely to be. Therefore, should a competitor launch a better product, a company may be saddled with stock it cannot sell.
Check your inventory turnover time with Jazoodle now
How do we derive your ATR?
Your ITT is derived by:
Total Cost Of Goods Sold divided by Total Inventory
How Can I Improve my ITT?
Your ITT can be improved in a number of ways, including:
- Implement Just In Time ordering processes
- Negotiate shorter delivery times with suppliers
- Manage stock levels according to sales trends and market changes