Overview
Inventory turnover tracks how quickly inventory is sold or used.
Formula
Inventory Turnover = Cost of Goods Sold / Average Inventory
How to Interpret
High Value
A high ratio can indicate healthy demand or lean inventory.
Low Value
A low ratio may indicate slow-moving inventory or demand weakness.
Where It Is Used
Defining Inventory Turnover alert thresholds against the company’s own historical median reduces false positives.