Answering Listener Questions: What Does My Inventory Turnover Mean? (And Why It Matters for Cash Flow)

Your inventory numbers are telling a story - but do you know how to read it? 

In this episode, Sarah answers listener questions about inventory turnover ratio - the metric that reveals whether your products are converting to cash or quietly draining your resources.

She shows how to turn a confusing ratio like "2.75" into clear insights - that inventory turnover ratio means it takes your business 146 days to sell through the product on your shelves. The eye-opener: Sarah shares how a rapidly growing meat company with impressive revenue was hemorrhaging cash because they had eight months of chicken inventory collecting freezer rent.

Listen in to learn:

• Step-by-step calculations for both accrual and cash-based businesses

• Why industry benchmarks miss the point

• And how to interpret your number based on lead times, growth plans, and cash runway. 

Essential listening for food entrepreneurs ready to make data-driven inventory decisions that protect cash flow.

BABOYOT Member Spotlight:

Amber Stevenson of Rosebud's Real Food

Learn more at www.rosebudsrealfood.com

 

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