Inventory Turnover
Calculate how many times a company has sold and replaced inventory during a given period.
Turnover Ratio
The Math
A higher ratio indicates strong sales or effective inventory management. A lower ratio may indicate weak sales or excess inventory.
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Inventory Turnover = COGS / Average Inventory
Inventory Turnover = COGS / Average Inventory