This document discusses inventory turnover ratio, which is a measure of how many times inventory is sold and replaced in a given time period, usually a year. It is calculated by dividing sales by average inventory. The document provides examples of inventory turnover ratios for different depots of a company. A good inventory turnover ratio is between 5 to 10, as it means inventory is being sold and replaced reasonably quickly. The document concludes with noting 12 ways for a company to potentially reduce the amount of inventory held.

1. SUPPLY CHAIN MANAGEMENT
HPM Chemicals & Fertilizers Ltd.
PPT.KUNZITE.01 Version 00.2021
By: SUNIL CHAWLA

2. • Measure of the number of
times inventory is sold and
replaced in a time period.
• Ratio is calculated by
dividing Sales by Inventory.
• The time period is typically a
year but can be shorter.
PPT.KUNZITE.01 Version 00.2021
Inventory Turnover Ratio

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Why Inventory Turnover Ratio

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Why Inventory Turnover Ratio

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Why Inventory Turnover Ratio

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What is Cost of Goods Sold (COGS) ?

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What is Average Inventory (AI) ?

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ITR Good Or Bad ?

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Average
Inventory=Opening
Stock + Closing
Stock divided by 2
Inventory Turn Over
Ratio= Net Sales Done
from Plant wise divided
by Average Inventory
No. of Days in
Year/Inventory
Turnover ratio
Average Inventory Inventory Turn Over Ratio
Days of
Inventory on
hand
North Karnal 2,544 163 329 246 10 35
North Ldh-Local 3,297 372 245 309 11 34
North Jaipur 810 83 52 67 12 30
North Sriganganagar 327 87 43 65 5 73
North Total 6,978 705 669 687 10 36
Inventory Turnover Ratio 2020-2021
SALES DONE
(From Plant)
Depot Name
Zone
Opening Stock
(April-2020)
Closing Stock
(March-2021)
Good Ratio is between 5 to 10 .

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12 Ways to Reduce Inventories