Inventory to cost of sales ratio

Inventory to cost of sales ratio,

Definition of Inventory to cost of sales ratio:

  1. Percentage of cost of sales attributable to average inventory. A decreasing number indicates higher efficiency in use of resources; an increasing number suggests potential cash flow problems due to greater sums tied up in inventory. Formula: (Average inventory during a period ÷ cost of sales during that period) x 100.

Meaning of Inventory to cost of sales ratio & Inventory to cost of sales ratio Definition