Inventory turnover is a way of measuring how many times a business sells its stock of inventory in a given time period. Businesses use inventory turnover to assess competitiveness, project profits, and generally figure out how well they are doing in their industry. Unlike employee turnover, a high inventory turnover is generally seen as a good thing because this means that goods are sold relatively quickly before they have a chance to deteriorate. Generally, inventory turnover is calculated with the formula Turnover = Cost of Goods Sold (COGS)/Average Inventory.
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