Question

If you wanted to assess inventory turns of a category with multiple SKU's, the best way to do that would be to ________________.

Answer 1

The best way to assess inventory turns of a category with multiple SKU's is to calculate the inventory turnover ratio.

Step-by-step explanation:

To assess inventory turns of a category with multiple SKU's, the best way would be to calculate the inventory turnover ratio.

The inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) by the average inventory value. This ratio helps measure how quickly inventory is being sold and replaced within a specific time period, which is essential for managing inventory and optimizing business operations.

For example, if the COGS for a category is $1,000,000 and the average inventory value is $200,000, the inventory turnover ratio would be 5. This means the inventory is being turned over 5 times within the given time period.