Inventory turnover

Inventory turnover measures how many times average inventory value turns through sales during a defined period. The usual financial formula is period cost of goods sold divided by average inventory at cost. The result is turns per reporting period, using consistent valuation for numerator and denominator.[1]

Use more inventory observations when seasonal peaks distort an opening-and-closing average. Higher turnover may indicate more efficient stock use but can coexist with poor availability. It differs from units sold per day and from the forward-looking number of days that current stock is expected to cover.