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Inventory Turnover illustration

Franchise · Efficiency

Inventory Turnover

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Use inventory turnover to see how quickly stock sells and gets replaced, so you can manage ordering and spot slow-moving inventory.

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Interactive workbench

Retail stock

Cost of Goods SoldAverage Inventory

$120,000 of COGS on $20,000 of average inventory is 6 turns.

Step 1 of 3

Variables and units

  • Cost of Goods Sold

    Cost of goods sold for the period.

    currency

  • Average Inventory

    Average inventory value over the period.

    currency

Common mistakes

  • Using ending inventory instead of the average.
  • Mixing retail price with cost values.

Step-by-step example

Retail stock

  1. 1. Start with the example inputs

    • Cost of Goods Sold$120,000
    • Average Inventory$20,000

  2. 2. Apply the formula

    Cost of Goods SoldAverage Inventory

  3. 3. Run the numbers

    6

    $120,000 of COGS on $20,000 of average inventory is 6 turns.

What this result means

An inventory turnover of 6 means stock sold through that many times in the period. Higher usually means fresher product and less cash tied up; too high invites stockouts. Compare within your category — grocery turns far faster than furniture.