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Turnover tells you how quickly stock becomes sales. Slow turnover means cash stuck on the shelf; fast turnover means your money works harder.
Inventory turnover = cost of goods sold / average inventory, where average inventory = (stock at the start + stock at the end) / 2, both at cost. Days on hand = days in the period / turnover.
Example: over a year you sold goods that cost 120,000. Stock was worth 25,000 at the start and 35,000 at the end, an average of 30,000. Turnover = 120,000 / 30,000 = 4, so stock sits for 365 / 4 = 91.25 days on average.
Check turnover:
Up Stock includes an inventory turnover report and an aging report that show which items sell and which tie up your cash.
It depends on what you sell. Groceries often turn 10 or more times a year, clothing 4 to 6, and hardware or electronics 3 to 5. Compare yourself with your own past and with similar shops.
Use cost for both cost of goods sold and inventory, so the two numbers are measured the same way.
Order smaller amounts more often, clear slow movers with discounts, and stop reordering items that have not sold for months.
It is how long, on average, an item waits in your shop before it is sold. Lower usually means less cash tied up.
The share of received stock that has sold
What holding stock costs you each year and month
Cost of goods sold and stock value, two methods side by side