FRInventoryTurnover(Inventory, Sales, NumOfDays)
FRInventoryTurnover returns the average turnover of inventory in days (for example, InventoryTurnover = (Inventory/Sales) * 360).
This ratio measures the turnover of inventories in days. A smaller ratio represents higher turnover, which means that inventories are sold quickly and are not stuck in the warehouses. A high turnover is generally preferred over a low turnover, which might be an indication of stale or obsolete inventory.
The following examples are applicable to both Basic and Crystal syntax:
FRInventoryTurnover(40, 400, 360)
FRInventoryTurnover(36, 90, 360)
Note: None of the arguments can be negative; you may have to check for negative values before passing the arguments.
FRInventoryTurnover is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.
Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.
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