Inventory Turnover Cost of goods sold divided by inventory. This shows how many times the inventory of a firm is sold and replaced during an accounting period. Larger values are preferred. When compared to an industry average, a low tumover tends to indicate that the company is carrying excess inventory, an unhealthy sign because excess inventory represents an investment with a low rate of retum. Over time, a consistent drop in inventory tumover indicates the lack of an effective sales strategy or poor selections in buying. Decreasing values have a negative effect on cash flow. (This ratio is calculated as sales divided by inventory by financial analysts such as Dunn & Bradstreet. Thus, the formula should be identified before comparing performance across firms (Also known as Inventory Utilization Ratio). The COGS-based calculation is preferable. Inventory Turnover 59.98 60.47 70.00 52.57 60.00 50.00 40.00 30.00 13.70 20.00 11.90 10.00 JJJJ 24.31 52.57 11.90 Inventory Turnover (COGS) 0.00 2018 2019 Plan Industry Inventory Turnover (COGS) Inventory Turnover (sales) Q3. Based on the Inventory Turn Rate, a. Inventory Turnover is fine (better than average) and improving (indicating an effective sales strategy). b. Inventory Turnover is not fine (worse than average) but improving (indicating an effective sales strategy). c. Inventory Tumover is currently fine (better than average) but declining (indicating an ineffective sales strategy). d. Inventory Tumover is not currently fine (worse than average) and declining (indicating an ineffective sales strategy).