# Inventory turnover ratio

*Last updated: 2026-06-22*

> The inventory turnover ratio is a key performance indicator showing how many times a company's average stock is sold or dispatched within a given period.

The inventory turnover ratio is a key performance indicator showing how many times a company's average stock is sold or dispatched within a given period. It is calculated by dividing total goods moved or sold by average inventory held during the same timeframe. A ratio of 12 means stock turns over once a month on average. High values indicate low capital tied up in warehousing and lean inventory management; low values point to excess stock that inflates storage costs and raises the risk of obsolescence or spoilage. In logistics, the ratio benchmarks warehouse performance and guides replenishment planning. It is the inverse of days-on-hand, which expresses the same relationship as a duration rather than a frequency.

**Source:** [https://en.wikipedia.org/wiki/Inventory_turnover](https://en.wikipedia.org/wiki/Inventory_turnover)

## Quick Facts

| Property | Value |
|---|---|
| Term | Inventory turnover ratio |
| Language | EN |
| Word count | 116 |
| Last updated | 2026-06-22 |
| Source | https://en.wikipedia.org/wiki/Inventory_turnover |

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