Turns Raw Materials - Inventory Turns

Go to content

Main menu:

 The standard Inventory Turns formula, Annual Cost of Sales / Average Inventory Level, is used for sellable goods. How ever, how do you calculate your turns for raw materials? Since you do not directly sell your raw materials, you base your calculation on material usage, rather than sales.
Raw Material Inventory Turns =  Value of Actual Material Used / Value of Raw Materials Inventory.
 
Example: ABC Company used $20,000,000 of raw materials and their average inventory was $3,000,000.
 Therefore, their raw material inventory turns , $20M/ $3M = 6.66.

...additional information coming soon.

 
Back to content | Back to main menu