TURNS ACCOUNT Meaning and
Definition
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"Turns account" is a term commonly used in the retail industry to refer to a method of managing inventory and measuring its efficiency. It is a financial metric used to assess how quickly a company is able to sell its inventory and generate revenue.
In simple terms, a turns account represents the number of times a company's inventory is sold and replaced within a given period, usually a year. It is calculated by dividing the cost of goods sold (COGS) by the average inventory value during that period.
The turns account provides valuable insights into a company's inventory management efficiency. A higher turns account indicates that goods are being sold more frequently, which implies that the company is effectively managing its inventory and minimizing the likelihood of excess or obsolete stock. On the other hand, a lower turns account could suggest that goods are sitting in inventory for longer periods, potentially leading to increased holding costs and reduced profitability.
By analyzing the turns account, businesses can make informed decisions about purchasing, production, and pricing strategies. It helps identify slow-moving or non-performing inventory, enabling companies to take corrective actions, such as adjusting pricing, promotions, or implementing better inventory control practices.
The turns account is a crucial measure for retailers, as it directly impacts cash flow, profitability, and working capital. It provides an essential metric to evaluate and optimize inventory operations, allowing businesses to maintain a healthy balance between inventory turnover and stock availability, ultimately enhancing overall operational and financial performance.
Common Misspellings for TURNS ACCOUNT
- rurns account
- furns account
- gurns account
- yurns account
- 6urns account
- 5urns account
- tyrns account
- thrns account
- tjrns account
- tirns account
- t8rns account
- t7rns account
- tuens account
- tudns account
- tufns account
- tutns account
- tu5ns account
- tu4ns account
- turbs account
Etymology of TURNS ACCOUNT
The term "turns account" does not have a specific etymology as it is a combination of two separate words: "turns" and "account".
1. "Turns" refers to the act of taking turns or alternating. It is derived from the Old English word "tyrnan", meaning "to turn, go around, revolve". This word has been in use for centuries to denote the action of rotating or changing direction.
2. "Account" is derived from the Old French word "acompte", which came from the Latin word "computare", meaning "to count, calculate". In English, it refers to a record or a statement of financial transactions.
So, when combined, "turns account" generally refers to a method of keeping track of alternating or rotating responsibilities, tasks, or financial transactions.
