Seasonal Change in Inventory

Many firms have inventories that are highly seasonal and change greatly throughout their business year. Therefore, calculating the inventory turnover from end of year inventories will not produce the most accurate results for different firms. Companies with large seasonal changes in inventories are better to calculate the firm's average inventory over the past year and use that to calculate inventory turnover than other less accurate methods.

Additional Accounting Tutorials and Accounting Examples:

FIFO Method and Weighted Average Inventory Method
Perpetual Inventory System
Basic Equation for Inventory Accounts
Inventory Cost Flow Assumptions
Accounting Inventory Shrinkage Example Problem
Merchandising Accounting Journal Entry