Stock turns four times a year. Two lines turn twenty.

The inventory turn ratio is a weighted average, and averages hide the thing you actually want to know: which part of the balance sheet has stopped moving.

By Steve 5 min read
Abstract bridge artwork for Stock turns four times a year. Two lines turn twenty.

Inventory turn is one of the few operational numbers that reaches the board pack, and it is almost always reported as a single figure. Cost of sales divided by average stock: four times, five times, six. The number is compared to last year, and to whatever benchmark the industry association publishes. Then the conversation moves on. The problem is structural rather than presentational. Turn is a weighted average, and the weighting runs the wrong way for diagnosis. Fast-moving lines have small balances by definition, that is what fast-moving means, so…

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