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    Business Dictionary

    The Yahoo Small Business Dictionary defines, explains, and cross-references more than 1,800 key small business words, phrases, acronyms, and concepts, covering topics including small business finance, management, sales, startup, exit strategy, and growth. To use the dictionary, type a word in the search box or click a letter to browse the listings alphabetically.

    Inventory turnover

    A measure of how often the company sells and replaces its inventory. It is the ratio of annual cost of sales to the latest inventory. One can also interpret the ratio as the time to which inventory is held. For example a ratio of 26 implies that inventory is held, on average, for two weeks (365 days in a year divided by inventory turnover ratio of 26 equals 14 days pr 2 weeks average inventory holding period). It is best to use this ratio to compare companies within an industry (high turnover is a good sign) because there are huge differences in this ratio across industries.

    Glossary provided by Campbell R. Harvey, Professor of Finance at Duke University.
    Copyright © 2006, Campbell R. Harvey. All worldwide rights reserved. Do not reproduce without explicit permission.

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