How to Calculate an Inventory Conversion Period. Inventory conversion period tells a small business owners how quickly, on average, inventory goes from being purchased to being sold.

The Formula to Calculate Gross Profit in Periodic Inventory Systems. A periodic inventory system uses a manual inventory count at the end of the year. This amount, labeled ending inventory ...

Understanding how to calculate the Cost of Goods Sold (COGS) is essential for any business owner. COGS represents the direct ...

The retail inventory method is a fast and easy valuation alternative to physical inventory counts.

The periodic inventory method is easy to implement; businesses see it as a more straightforward calculation and allow them to make fewer record-keeping transactions.

A company can then divide the days in the period, typically a fiscal year, by the inventory turnover ratio to calculate how many days it takes, on average, to sell its inventory.

To calculate inventory turnover ratio, divide cost of goods sold by average inventory over a period of time. A higher ratio is usually better than a lower one.

Along with sales and inventory for a period, the retail inventory method uses the cost-to-retail ratio.