Stock Turnover

Stock turnover, also called inventory turnover, is calculated by dividing the cost of goods sold by average inventory value over a period. A high turnover means stock moves quickly and little capital sits idle; a low turnover suggests overstocking, slow-moving items or weak demand.

The ideal turnover varies by industry — perishable goods should turn over far faster than industrial spares. Tracking turnover helps procurement and inventory teams decide order frequency and quantity, spot dead stock, and free up working capital tied up in slow items.