An inventory turnover analysis is useful to the internal auditor because it may detect <u>the existence of obsolete merchandise.</u>
Inventory that has reached the end of its useful life is called as obsolete inventory. It has been a while since this inventory was utilized or sold, and it is not anticipated that it will be in the near future. This kind of inventory must be written off or written down and can result in significant losses for a business.
<h3>What is turnover analysis?</h3>
The dynamics of people leaving or remaining in an organization are evaluated using turnover analysis to:
- The causes of people's departures and stays
- The expense of turnover caused by a lapse in company continuity
- How to reduce the danger of present employees leaving the company through turnover
The projected expense of replacing a paid worker ranges from 6 to 9 months of that worker's salary and includes both the direct expense of hiring a replacement and the indirect expense of lost productivity.
The ability of the company to accomplish its objectives and provide for its consumers may be compromised by high turnover. The customer experience can change noticeably even in response to small increases in turnover.
Employee turnover costs are frequently unforeseen and hence not accounted for.
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