GlossaryEN1 min readUpdated: Jun 22, 2026
Inventory Turnover
A warehouse manager reviewing quarterly results notices that a fast-selling item repeatedly ran out of stock – a clear sign that replenishment cycles were too slow and that turnover had been underperforming.
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A warehouse manager reviewing quarterly results notices that a fast-selling item repeatedly ran out of stock – a clear sign that replenishment cycles were too slow and that turnover had been underperforming. Inventory turnover measures how many times average stock is fully consumed and replaced within a given period; the ratio is calculated by dividing the cost of goods sold by the average inventory held over the same timeframe. A high ratio indicates fast-moving goods and lean capital deployment; a low ratio points to overstocking or sluggish demand. Logistics managers use the metric to benchmark storage efficiency, flag underperforming SKUs, and make informed decisions on shelf space allocation. Meaningful comparisons only hold within the same sector: a cold-chain food distributor will post far higher turnover than an industrial spare-parts depot.
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