Inventory Turnover
Categories: Accounting, Tax, Company Valuation, Company Management
This number show how often a business replaces and sells its inventory over a specific period of time (a month, a year).
The number can be found with this handy-dandy formula:
sales / inventory
A high number means that lots of stuff is selling. That's good (especially if you're selling something that rots), but it also means you need to pay attention so that you don't run out of stuff to sell. A low number means you're not selling much. Maybe it's time to get your business on a reality TV show.