Merchandise Turnover: Formula, Benchmarks & Examples
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Key terms
- BenchmarkA standard index or portfolio used to measure investment performance. Common benchmarks include the S&P 500 for large-cap stocks and the Bloomberg Aggregate Bond Index for bonds.
- Inventory TurnoverA financial ratio that measures how many times a company sells and replaces its inventory over a specific period, indicating how efficiently the business manages its stock. A higher inventory turnover generally suggests strong sales and effective inventory management, while a low turnover may indicate overstocking or weak demand. It is calculated by dividing cost of goods sold by average inventory and is particularly important for retail and manufacturing businesses.
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