Stock turns four times a year. A quarter of it turns once.

An aggregate inventory turn is an average of two very different businesses sharing one warehouse, and only one of them is paying its way.

By Steve 4 min read
Abstract bridge artwork for Stock turns four times a year. A quarter of it turns once.

Inventory turnover is one of the few operating ratios that almost every business with a stockroom can quote from memory. Four times a year. Six. Nine, if things are running well. It is a comforting number because it is a single number, and single numbers invite comparison against last year and against the trade average. It also conceals the thing worth knowing. Turnover is cost of goods sold divided by average inventory: a ratio of a flow to a stock. Both the numerator and the denominator are dominated by whatever…

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