INVENTORY TURN

Inventory Turn is COGs/Avg. Inventory.

My question is how to calculate avg. inventory - should it be:

1. (Inventory at the start of year + inventory at end of the year) / 2; OR
2. Avg monthly inventory balance by taking the 12-month inventory month-end balance / 12?

Assuming #2 is a better denominator, but wanted to get the community thoughts.



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