The inventory turnover ratio shows how many times a business has sold and replaced inventory during a given period. It is calculated by dividing cost of goods sold by average Inventory for the period.This ratio measures a company's efficiency in managing its stock of goods and utilizing net working capital. A low turnover rate may point to poor sales, excess inventory, or overstocking.
Learn Inventory Turnover with interactive examples and practice exercises in our Performance Metrics module.
This interactive learning module helps you understand Inventory Turnover through hands-on practice and real-world examples.