Inventory turnover
If you carry £50,000 of stock on average and sell £200,000 worth of it (at cost) in a year, you have sold through your stock four times. A high number means stock sells quickly; a low number means money is sitting on your shelves. How many times a year you sell through and replace your stock is called inventory turnover.
The sum is the cost of what you sold divided by the average value of the stock you held. Use cost, not selling price, and an average across the year rather than one day's count.
There is no single good number. A greengrocer may turn stock over every week, a furniture maker a few times a year. Compare yourself with your own last year and with similar businesses, and look at it by product group, because one slow line can hide inside a healthy average.
In practice
A pet-food shop holds £30,000 of stock on average and sold £180,000 at cost this year. 180,000 ÷ 30,000 = 6, so the stock turns over six times a year, roughly every two months.
Ready to see BizBloqs on your own process?
Book a demo and we will walk your warehouse and order flow end to end — inbound, storage, picking, shipping, returns — and tell you honestly what BizBloqs would change.
Two questions about your own operation
How many of your articles sit in a pick location they empty less than once a month?
Part one: Laying out a warehouse does not start with the racking
After your last integration, how many systems hold a stock quantity for the same item? Name them.