This measure calculates raw material inventory turns by dividing cost of goods sold (COGS) for the year by the average value of month-end total inventory (raw materials, work-in-process, and final goods) for the most recently completed fiscal year. COGS represents the cost of purchasing raw materials and manufacturing finished products. It is part of a set of Process Efficiency measures that help companies optimize the performance of their "produce product" process by minimizing waste and refining resource consumption.
Raw material inventory turn rate
Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.