Articles on: Getting Started

How is the inventory turnover rate calculated?

Inventory Turnover Rate is a financial metric used to measure how efficiently a company manages its inventory. It indicates how many times a company's inventory is sold and replaced over a certain period, usually a year.


Terms and formula


  • SKU: Stock Keeping Unit, a unique identifier for your product variants.


  • Inventory turnover rate: how many times a company's inventory is sold and replaced over a certain period.


[Cost of Goods Sold] / [Average Inventory Value]


  • Average inventory value: the average value of inventory during the period.


( [Begingin Inventory Value] + [Ending Inventory Value] ) / 2


  • Units sold: how many units sold of products in a certain period.


  • Average inventory quantity: the average quantity of inventory during the period.


( [Begingin Inventory Quantity] + [Ending Inventory Quantity] ) / 2


Updated on: 11/02/2025

Was this article helpful?

Share your feedback

Cancel

Thank you!