Sherman’s Index

Sherman's Index is a financial metric used to evaluate the efficiency of a company's inventory management. It measures how effectively a company turns its inventory into sales by calculating how many times inventory is sold and replaced over a specific period. A higher index indicates quick inventory turnover, meaning the company sells and replenishes stock rapidly, which can reduce holding costs and improve cash flow. Conversely, a low index suggests slow-moving inventory, potentially tying up resources. It helps identify how well a company manages its stock levels relative to sales performance, aiding in operational and financial decision-making.