Perpetual Inventory System: A system that continuously records inventory levels, cost of goods sold, and ending inventory by updating the records with each purchase and sale transaction.
Periodic Inventory System: A system that determines the cost of goods sold and ending inventory at the end of an accounting period through a physical count of the remaining inventory.
Inventory Turnover Ratio: A financial ratio that measures the efficiency of a company's inventory management by dividing the cost of goods sold by the average inventory.