Inventory turnover is used to measure the activity or liquidity of a firms inventory. It is calculated by inventory turnover= cost of goods sold / inventory. This measures how many times average...

Inventory turnover is used to measure the activity or liquidity of a firms inventory. It is calculated by inventory turnover= cost of goods sold / inventory. This measures how many times average inventory is sold during a period. You can also divide the days in the period by the inventory turnover and this will show how many days it takes to sell inventory on hand. Theinventory turnover can help businesses make better decisions on pricing, manufacturing, marketing and purchasing new inventory. A limitation toinventory turnover ratio is that its usuallycalculated based on year-end inventory levels found on the balance sheet. This is an issue because inventory turnover analysts often have to calculate it based on year-end inventory levels found on the balance sheet, as most firms do not release average weekly or monthly inventory levels. There numbers can be off which can result in problems.
Read and respond to other students' posts.

In your response to one other student post, respond to student's posts with an external use of the ratio they selected. List a limitation for external users. Please use basic English to answer this statement above in one paragraph. Don't do any outside research. Please refer to the book I have sent via email from [email protected] from order 39149