Inventory turns
How many times you sell and replace your stock in a year.
01 What it is
Why anyone looks at this number
How many times you sell and replace your stock in a year.
It is the same information as days of stock, expressed the way finance and boards compare businesses. Low turns mean cash locked in the warehouse.
02 The formula
How it is worked out
Inventory turns = cogs ÷ average_inventory_value grain : year × site × product group unit : times per year source : Inventory subledger and product costing
Use average inventory, not the closing balance. Year-end stock is almost always unrepresentative, especially in a seasonal business.
03 Worked example
The same number, with real inputs
| Annual COGS | €32.0m |
| Average inventory | €5.26m |
| Calculation | 32.0 ÷ 5.26 |
| Result | 6.1 turns |
Six turns is 60 days of stock. Getting to seven releases about €700k — the same as a decent cost programme, without touching the cost base.
04 What moves it
Four things that actually change this number
Demand variability
The more variable, the more buffer you carry.
Lead times
Long or unreliable supply forces stock.
Range breadth
More variants means more of everything.
Batch sizes
Production and purchase economics push stock up.
05 Where the number lives
The system, the record and the fields
| System of record | Key record | Fields you need |
|---|---|---|
| Inventory subledger and product costing | Stock item by plant | opening_stock, closing_stock, cogs, valuation_method |
Use average inventory, not the closing balance. Year-end stock is almost always unrepresentative, especially in a seasonal business.
06 How it goes wrong
Three ways this metric misleads people
Using the closing balance
A quiet December makes the whole year look efficient.
Fix: Average the monthly balances.Group-level only
Fast and slow product families average into a comfortable middle.
Fix: Report by family and highlight anything under one turn.Ignoring obsolete stock
Dead stock depresses turns permanently and no operational action will fix it.
Fix: Provision and report it separately.08 Questions
Frequently asked
How do turns relate to days of inventory?
They are reciprocal: days = 365 ÷ turns. Operations usually prefer days; finance usually prefers turns.
What is a good number of turns?
It varies hugely — grocery runs dozens, capital equipment runs two or three. Compare to your own history and to direct competitors only.
One definition, everywhere it is used
SCIKIQ stores this metric once and serves it to every dashboard, board pack and agent that asks.