- By My Soul Market Manager
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- Forex Trading
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Investors often take note of the asset turnover ratio to make comparisons with similar companies in the same industry. You would work out the inventory by dividing the cost of goods sold (COGS) by average inventory. This process is similar to the above formula we used for accounts receivable. Business leaders also use the term “turnover” to refer to how often their inventory or stock gets replaced. On the other hand, a high inventory turnover might imply a strong sales performance.
