So what happens is that while setting up a store whether its company owned or a franchise store. The store requires a minimum inventory as jewellery for them to offer to the customers and all the inventory is sourced from Senco. Inventory turn is basically the churn the stores do with the inventory towards the customers. The iventory turn for the first year for a franchise store on an average is 2.
That means they are able to turn the 10-12 crore inventory which they brought from senco twice. That implies that total sales from a franchise store if their inventory turn is 2 could be around 20-24 cr with 11-12% gross margins in hand. So Higher the inventory turn >> Higher sales >> More profits on the same fixed assets >> better roe.
| Subscribe To Our Free Newsletter |
