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Chapter 19

5.3 Inventory turnover

Inventory turnover calculates how many times the year-end level of inventory has
been turned over, or sold, during the year.

Inventory turnover is calculated as follows:

Cost of Sales
Inventory = times p.a.

Another way of expressing this is to calculate the average inventory holding period as
follows:

Inventory
Cost of Sales × 365

Illustrations and further practice

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