Functions of Slide-ways

Inventory turnover Inventory turnover is a financial metric used to measure the number of times a company's inventory is sold and replaced over a given period of time. It is calculated by dividing the cost of goods sold by the average inventory value for a specific period, typically a year. A higher inventory turnover indicates that the company is effectively managing its inventory and selling its products in a timely manner, while a lower turnover may indicate overstocking or slow-selling products. Inventory Turnover Ratio = Cost of Goods Sold / Avg. Inventory Inventory turnover quantifies how frequently a business changes its stock in relation to its cost of sales. A low inventory turnover ratio might indicate sluggish sales or overstocking (also known as surplus inventory). It may be a sign of poor marketing or an issue with a retail chain's merchandising plan. On the other side, a high inventory turnover ratio denotes robust sales. Alternately, there could not be enough stock to go around. As far as issues go, making sure a firm has enough inventory to sustain robust sales is preferable than having to reduce inventory because business is sluggish. (Fernando, 2022). A key indicator of a company's performance is how quickly it can turn through its inventory. Retailers who convert inventory into sales more quickly typically beat similar rivals. An inventory item's holding cost increases and its chance of being purchased again decreases the longer it is on hand. Receivable turnover Receivable turnover is a financial metric that measures a company's ability to collect its accounts receivable (amounts owed to the company by its customers) in a given period. It is calculated by dividing net sales by average accounts receivable for the same period. A high receivable turnover ratio indicates that a company is efficiently collecting its debts, while a low ratio may indicate potential problems with collections or extended credit terms. The ratio also counts the number of times a company's receivables are turned into cash during a specific time period. It is possible to determine the receivables turnover ratio on a yearly, quarterly, or monthly basis. Net Annual Credit Sales / Average Accounts Receivables = Accounts Receivables Turnover Accounts receivable ratios show how effectively a business is able to collect accounts receivable and how quickly its clients pay off their obligations. (Beaver, n.d.).Despite the fact that figures differ by industry, larger ratios are sometimes preferred because they imply a quicker turnover and a stronger cash flow. Businesses that receive payments more quickly typically have stronger financial standing.