Inventory turnover ratio: Definition, Formula & Why It Matters
Also called: Stock turn, Inventory turns
Inventory turnover ratio measures how many times you sell and replace your entire inventory in a period. It is cost of goods sold divided by average inventory. Higher turnover means your capital cycles faster; online gear resale commonly runs 6 to 12 turns per year.
Inventory turnover ratio formula
Example
$60,000 in COGS against $10,000 average inventory is a turnover of 6.0 times per year.
Why it matters for Reverb sellers
Turnover is the clearest signal of whether your cash is working or sitting on the shelf. Low turnover ties up working capital and raises the risk of aging stock; very high turnover can mean you are selling out and leaving sales on the table.
How Verbstack helps
Verbstack calculates turnover across your shop automatically so you always know how fast your inventory is moving.
Try it yourself with the Inventory Turnover Calculator.
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