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How to calculate Inventory turnover

The Inventory turnover formula, with plain worked examples you can check yourself.

Inventory turnover = COGS ÷ I

The result is a number in ×.

Worked examples

COGS = 1000 · I = 200Inventory turnover = 5×
COGS = 800 · I = 100Inventory turnover = 8×
COGS = 2400 · I = 400Inventory turnover = 6×

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Operations.

Related terms

InventoryBottleneckOutsourcingEconomies of scaleLean manufacturingCapacity planning

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