Business & Sales

What Is Inventory Turnover?

Inventory turnover measures how many times a business sells and replaces its inventory during a period. It is calculated by dividing the cost of goods sold by average inventory. A higher turnover generally means inventory sells quickly; a lower one can indicate overstocking or slow-moving products.

Formula

Inventory turnover = cost of goods sold ÷ average inventory. With COGS of 1,200,000 and average inventory of 200,000, turnover is 6.

Days in Inventory

365 ÷ turnover gives the average number of days items stay in stock — about 61 days in the example.

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🔗 Related Terms

Cost of Goods Sold (COGS) Working Capital Gross Profit Dropshipping

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.