What is inventory turnover?
October 30, 2026
Inventory turnover is how many times a business sells and replaces its stock over a period, usually a year. A higher figure means stock sells faster and less cash is tied up in it; a lower figure can point to overstocking or slow-moving lines.
Formula
Inventory turnover = cost of goods sold ÷ average stock value
Why it matters for online retailers
Stock that sits on a shelf is cash you can't use elsewhere. Inventory turnover shows how hard your stock is working, and tracking it by product line shows which lines earn their space and which don't.
How to calculate it
Inventory turnover = cost of goods sold ÷ average stock value. Average stock value is usually your opening stock value plus your closing stock value, divided by two.
For example, if you open the year with £90,000 of stock, close it with £110,000, and your cost of goods sold for the year is £600,000, your average stock is £100,000 and your turnover is 6. That means stock sells through about every 61 days (365 ÷ 6).
What is a good inventory turnover?
It depends on what you sell. Fast-moving goods such as consumables turn over much more often than furniture or seasonal lines. Compare against your own past figures and similar businesses rather than a single benchmark.
How to improve it
- Set reorder points from real sales data and supplier lead times.
- Find and clear deadstock and slow-moving lines.
- Order smaller amounts more often where minimum order quantities allow.
- Review turnover by product line, not just for the whole business.
How StoreFeeder handles it
StoreFeeder's FIFO stock valuation and Insights reporting give you the stock value and cost of goods figures needed to work out turnover. Basic stock forecasting is included in every plan; advanced forecasting is part of the Advanced Operations Pro add-on.
Read more about StoreFeeder inventory management, or read the longer guide: what is a good inventory turnover ratio?
Frequently asked questions
Is a high inventory turnover always good?
Not always. Very high turnover can mean you're running too lean and risking stockouts. The aim is a figure that keeps stock moving without missing sales.
What is the difference between inventory turnover and days of stock?
They show the same thing two ways. Days of stock is 365 divided by turnover: a turnover of 6 is about 61 days of stock.
Should I use cost or sales value?
Use cost of goods sold with stock valued at cost, so both sides of the sum are measured the same way.
