Ratio Analysis - Inventory Turnover Ratio

Hello Group Members,

IDEA lends immense value and ease to Ratio Analysis in Financial Statements and related accounts imported to IDEA.

Let us delve on this post with an example - the Inventory Turnover Ratio.

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. In other words, it measures how many times a company sold its total average inventory during the year.

The Inventory Turnover Ratio is to be calculated by dividing the Cost of Goods Sold by the Average Inventory.

Now if you have a file in IDEA where the Cost of Goods Sold and Average Inventory are appearing as columns (fields), calculating the ratio is a simple process of appending a virtual numeric field titled ‘Inv Turn Ratio’ with criteria Cost of Goods Sold/Average Inventory.

But if the two fields viz Cost of Goods Sold and Average Inventory are not appearing as columns (fields) but as rows one below the other, then you need to bring the Average Inventory by the side of Cost of Goods Sold in a columnar view. This can be done by appending a virtual numeric field titled ‘Avg Inv’ with the criteria @getnextvalue(“AMOUNT”). @getnextvalue() will move the Average Inventory up one row by the side of the Cost of Goods Sold for easy ratio computation.

Best Regards

Group Admin Team