Let’s make it easy and logical, and say it’s over a 12 month period.Ī higher inventory turnover ratio would indicate a better sales strategy and a more efficient approach to inventory management. You can calculate your rate of inventory turnover by dividing the cost of goods sold by the average inventory value. How many times have you sold and replaced your inventory during a specific period? However, this powerful formula can reveal some critical information about the health of your supply chain processes. And we’ll even explore some practical strategies to make your inventory turnover faster.

We’ll delve into what a ‘good’ Inventory turnover rate looks like. We’ll talk about how you can use your inventory turnover to assess efficiency. Throughout this blog, we’ll tell you everything you need to know about inventory turnover. To make sure it’s anywhere close to achievable, you need to make every pound you spend count. Therefore, when it comes to inventory levels, less is more. And crucially, the highest profits you can muster, from the smallest amount of stock. You want the maximum value you can achieve. So, how can you work your inventory as hard as possible? How can you reap the rewards from every penny you invest? And how do you make sure your inventory makes money, not drains it? Supply chain inefficiency will kill your results and your bank balance. Managed poorly, however, your inventory is nothing more than a big hole in the business where money’s shovelled in, like a steam train using bank notes to run up a mountain. But only if it’s managed in the right way.

Manage it well and you will unlock all the riches you and your Finance Director desire. Your inventory could be an untapped goldmine. How inventory turnover can boost your bottom line

Days inventory turnover formula