### FRInventoryTurnover (Inventory, Sales, NumOfDays)

Basic and Crystal syntax.

##### Format

`FRInventoryTurnover(Inventory, Sales, NumOfDays)`

##### Arguments

- Inventory is a Number or formula. Inventory is the total inventories in a company's balance sheet. In general, it includes all raw material, work in progress and finished goods.
- Sales is a Number or formula. Sales is the total sales during the period that appears in a company's income statement.
- NumOfDays is a Number or formula. In general, NumOfDays is the number of days in a year. Some analysts use 360 and some use 365. The default is 360 for this function.

##### Action

FRInventoryTurnover returns the average turnover of inventory in days (for example, InventoryTurnover = (Inventory/Sales) * 360).

##### Typical uses

This ratio measures the turnover of inventories in days. A smaller ratio represents higher turnover, which means that inventories are sold quickly and are not stuck in the warehouses. A high turnover is generally preferred over a low turnover, which might be an indication of stale or obsolete inventory.

##### Examples

The following examples are applicable to both Basic and Crystal syntax:

`FRInventoryTurnover(40, 400, 360)`

Returns 36.

`FRInventoryTurnover(36, 90, 360)`

Returns 144.

Note: None of the arguments can be negative; you may have to check for negative values before passing the arguments.

##### Comment

FRInventoryTurnover is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.

Seagate Software, Inc. http://www.seagatesoftware.com Please send comments to: techpubs@seagatesoftware.com