Inventory
Inventory Turnover
How many times inventory cost is sold through in a period.
Formula
COGS / Average Inventory Value
Required inputs
- COGS
- Average inventory value
Worked example
₹6,00,000 COGS / ₹1,50,000 average inventory = 4 turns.
How to interpret it
More turns can indicate efficient stock use; check availability and margin too.
Common mistake
Use average inventory for the same period as COGS.
When to use it
Spot slow-moving or over-stocked inventory.