What is inventory turnover?
Inventory turnover shows how quickly stock is sold and replenished over a period.
Direct answer
Inventory turnover is often calculated as cost of goods sold divided by average inventory value for the same period.
Why this matters
It connects growth plans to cash flow, stock risk, ad scaling, and merchandising decisions.
What to check
Use this term as an operating checkpoint, not just a glossary definition.
- Track fast, normal, slow, and dead stock separately.
- Review turnover before increasing ad spend on limited inventory.
- Pair turnover with margin and refund data.
Common mistake
High ROAS can create operational risk if the promoted SKU runs out while substitutes remain unsold.
FAQ
Is high inventory turnover always good?
Not always. Very high turnover can mean stockout risk, missed demand, or underbuying.
How does inventory turnover affect ads?
Ads should not scale hard into SKUs with shallow stock unless replenishment and substitute products are ready.
What should I do with slow-moving inventory?
Review margin, seasonality, search demand, bundles, discount depth, and whether the SKU deserves more content or should be cleared.