Inventory Turnover (Turns)

Inventory turnover (turns) is how many times inventory sells through and is replaced in a year — cost of goods sold ÷ average inventory at cost. Higher turns mean the same capital generates more sales.

Turns measure how hard your working capital works. Low turns tie up cash in stock that ages toward markdown; very high turns can signal chronic stock-outs and lost sales. The right level is channel- and category-specific.

Turns and margin together drive GMROI — a high-turn, low-margin line and a low-turn, high-margin line can return the same on inventory.