To calculate inventory turnover, divide the cost of goods sold by average inventory for the quarter or for the year. Use this information to determine if inventory turnover supports the number of quarterly or yearly sales. Rapid or slow inventory turnover may signal changes in demand or poor inventory management.How to determine inventory turnover?
Calculating Inventory Turnover As with a typical turnover ratio, inventory turnover details how much inventory is sold over a period. To calculate the inventory turnover ratio, cost of goods sold (COGS) is divided by the average inventory for the same period. 1 Inventory Turnover Ratio = Cost Of Goods Sold ÷ Average Inventory