# Inventory Turnover

*Accounting & Reporting — Finicade finance glossary*

Inventory turnover is how many times stock is sold and replaced in a year. High turnover means less capital tied up and less obsolescence risk, which is why grocers turn inventory dozens of times and jewellers once or twice. A falling trend usually precedes discounting and writedowns, making it one of the more predictive operational ratios.

**Formula:** `Inventory turnover = COGS ÷ Average inventory`

**Also known as:** stock turnover, inventory turns, days inventory

**Related terms:** [Inventory](https://finicade.com/glossary/inventory), [Cost of Goods Sold](https://finicade.com/glossary/cost-of-goods-sold), [Cash Conversion Cycle](https://finicade.com/glossary/cash-conversion-cycle), [Working Capital](https://finicade.com/glossary/working-capital), [Gross Margin](https://finicade.com/glossary/gross-margin)

Source: https://finicade.com/glossary/inventory-turnover