What is a good inventory turnover ratio?▾
It varies by industry: grocery and FMCG retailers turn stock 10–20 times a year, general retail 4–8, and manufacturers of engineered goods 3–6. Compare with your own history and peers.
Should I use sales or COGS?▾
Use cost of goods sold, because inventory is valued at cost. Using sales overstates turnover.
How can I improve inventory turnover?▾
Cut slow-moving items, order smaller quantities more often, improve demand forecasts and negotiate shorter supplier lead times.
What does low turnover indicate?▾
Overstocking, obsolete items or weak sales — cash is tied up in stock that is not moving.
