Inventory turnover
Understand inventory turnover metrics that measure stock movement efficiency, assess business performance, and optimize inventory management strategies.
Gray Levine
Inventory turnover is a key business metric that measures how many times a company's inventory is sold and replaced over a specific period. This crucial measurement helps organizations understand the efficiency of their inventory management and overall business performance.
The metric provides insight into how well a company manages its stock, indicating whether it maintains appropriate inventory levels relative to sales. High turnover typically indicates efficient operations, while low turnover might suggest overstocking or obsolescence issues.
The standard calculation methods include:
Organizations use turnover analysis to:
Effective turnover management requires:
Understanding turnover helps organizations: