Inventory Turnover
Short answer
Inventory turnover is how many times per year your inventory cycles through the business.
Formula
Inventory Turnover = COGS / Inventory
Cost of goods sold for the year, divided by the value of inventory on hand.
Why it matters
High inventory turnover means inventory isn't tied up as dead cash. Low turnover risks markdowns, write-offs, and storage costs. The 'right' number is highly industry-dependent.
Benchmarks
People also ask
Common questions about Inventory Turnover
What is Inventory Turnover?+
Inventory turnover is how many times per year your inventory cycles through the business.
How is Inventory Turnover calculated?+
Cost of goods sold for the year, divided by the value of inventory on hand.
What is a good Inventory Turnover?+
A healthy inventory turnover is typically around ≥ 10×/yr — fast turn (food, dtc). Specific targets vary by industry and stage; check our benchmarks above for your sector.
Why does Inventory Turnover matter?+
High inventory turnover means inventory isn't tied up as dead cash. Low turnover risks markdowns, write-offs, and storage costs.
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