Inventory Turnover measures the number of times inventory is converted to sales during a year. It is measured by ratios expressed in either turnover or days. The target is to minimize investment in inventory while maximizing sales. The data needed for this analysis is reported on the company Income Statement and Balance Sheet.
How does your pharmacy compare?
Median Inventory Turnover as reported in the 2013 NCPA Digest is:
* 11.1 times annually or
* 33 days of inventory on hand
Too little inventory results in an unacceptable number of out of stocks. Too much inventory needlessly ties up cash. Decreasing your inventory on hand will increase the annual turn and decrease the number of days of inventory on hand and will improve cash flow by freeing up dollars tied up in inventory.