Inventory Turnover Ratio
About this topic
The Inventory Turnover Ratio is a key asset management metric for Zambian tertiary students in health supply chain management. It measures how efficiently inventory is used and is calculated as Cost of Goods Sold divided by Average Inventory. A high ratio indicates fast-moving stock (e.g., essential medicines), while a low ratio suggests overstocking or obsolescence. Students analyze this ratio for pharmacies and medical stores in Zambia to optimize stock levels, reduce waste, and free up working capital. This knowledge is vital for exams and for managing healthcare resources effectively, ensuring vital supplies are available without tying up excessive funds in stagnant inventory.
What you'll practise (1 question)
- In the context of laboratory management, what is the main purpose of 'Inventory Turnover Ratio'?
Answer each question above to see the correct answer and a full explanation.