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Use the Inventory Turnover report in QuickBooks Enterprise 2024

by Intuit Updated 3 weeks ago

Learn how to use the Inventory Turnover report in QuickBooks Enterprise 2024.

There are multiple tools to help you manage and track your inventory in QuickBooks Enterprise 2024. The R7 release of QuickBooks Enterprise 2024 adds another tool, the  Inventory Turnover report. 

The Inventory Turnover report measures how effectively your company uses inventory. It'll help you:

  • Understand how your inventory items are selling
  • Determine the number of days it takes to sell items in your inventory
  • Date when the inventory was sold last/invoiced
  • Make informed choices on reorder points, quantities, and prices
  • Minimize inventory-related risk to improve financial stability.

The Inventory Turnover report calculates two values to give you better insights into your inventory. These values are the Inventory Turnover Ratio and Inventory Turnover Days.

  • Inventory Turnover Ratio is calculated with this formula, the total cost of goods sold (COGS) divided by the average inventory value over a period of time.
    • The Average Inventory value is the sum of the beginning and ending inventory values divided by 2.
      For example, let’s take the COGS is $5000 over a year, and the average inventory value is $2000. The turnover ratio will be ($5000/$2000) =2.5. This means your business is able to sell and replenish inventory 2.5 times a year.
  • Inventory Turnover Days is calculated with this formula, the number of days in the period divided by the inventory turnover ratio.
    • For example, with the inventory turnover ratio above, the inventory turnover days will be (365/2.5) =146 days. This means that your business takes 146 days to sell the inventory.

A higher turnover ratio or lower number of turnover days means your inventory is selling quickly, while the opposite means it takes longer to sell your inventory.

How to use Inventory Turnover report in QuickBooks?

To run the Inventory Turnover report, you first need to enable Inventory for your business in preferences. Here’s how you can do it:

  1. Go to Edit and select Preferences.
  2. Select Items & Inventory, then select Company Preferences.
  3. Select Inventory and Purchase Orders are Active, then select OK.
  4. Go to Reports, select Inventory then Inventory Turnover By Item.

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