Accounting
Intermediate

Inventory Turnover

How many times inventory is sold per period.

Formula

IT=COGSAvg InventoryIT = \frac{COGS}{\text{Avg Inventory}}

Variables

COGSCost of goods
InventoryAverage stock

Example

Higher = efficient

Did You Know?

High inventory turnover means goods fly off the shelves, the lifeblood of low-margin retailers.

efficiency