top of page
Costs and Benefits of Holding Inventory
What are the costs associated with holding inventory?
The costs associated with holding inventory include carrying costs (such as storage, insurance, and obsolescence), ordering costs, and stockout costs (resulting from insufficient inventory).
How does inventory turnover ratio impact the financial performance of a business?
The inventory turnover ratio measures how quickly a business sells its inventory over a given period. A higher inventory turnover ratio indicates efficient inventory management, faster inventory turnover, and less capital tied up in inventory. It can lead to improved cash flow, reduced carrying costs, increased profitability, and better financial performance for the business.
bottom of page