Ads end in 20 seconds
This content is free thanks to our sponsors
Sponsored Ad – I may earn a commission if you click and buy
Business
Inventory Turnover
How many times a business sells and replaces its stock during a period — a measure of how efficiently inventory is managed.
Inventory turnover = Cost of Goods Sold / Average Inventory. Higher numbers usually mean better performance, but too high can mean stockouts and lost sales. The ideal number varies by industry — fashion turns over faster than furniture.
In online business, good forecasting and supplier speed help improve this metric.
It's like how quickly your snacks get eaten and restocked at home. If you buy a big bag of crisps and finish it fast, your turnover is high. Businesses want high turnover so money isn't tied up in unsold goods.
Real world: A successful dropshipping or e-commerce store selling trending items might have high inventory turnover. Slow-moving products tie up cash and risk becoming outdated. Retailers track this to decide what to stock more of.
💡 High inventory turnover keeps cash flowing and reduces the risk of dead stock sitting on shelves (or in supplier warehouses).