Inventory Turnover

Inventory turnover measures how fast a business sells its stock of goods and replaces them with new ones. When a company's shelves empty quickly, it's a sign of a healthy business; if products sit on shelves for a long time, it suggests a sluggish business. To calculate inventory turnover, you take the total sales value (money made from selling products) and divide it by the average inventory value (the total cost of the goods in stock). A high turnover rate suggests efficient sales and good product selection. A low rate might indicate overstocking or less popular products. Tracking this metric helps businesses manage their stock effectively and make smarter buying decisions.