# inventory turnover ratio

*Last updated: 2026-06-26*

> The inventory turnover ratio measures how often stock is sold and replenished within a given period—usually one year.

The inventory turnover ratio measures how often stock is sold and replenished within a given period—usually one year. It is calculated by dividing cost of goods sold by average inventory, and serves as a key indicator of both operational efficiency and working capital management. A high ratio reflects fast-moving goods and lean storage costs; a low ratio points to overstocking or slow movers that lock up capital. In customs and foreign trade contexts, the ratio also informs decisions on bonded warehouse utilisation and inventory valuation for export declarations.

**Source:** [https://www.investopedia.com/terms/i/inventoryturnover.asp](https://www.investopedia.com/terms/i/inventoryturnover.asp)

## Quick Facts

| Property | Value |
|---|---|
| Term | inventory turnover ratio |
| Language | EN |
| Word count | 88 |
| Last updated | 2026-06-26 |
| Source | https://www.investopedia.com/terms/i/inventoryturnover.asp |

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