Inventory Turns

A measure of how fast inventory is “turning” for a company over a certain period of time. It is most commonly calculated as the cost of goods sold divided by the average level of inventory on-hand, or sometimes by a snapshot at some period, such as end of year. So, turns is equal to the cost of goods sold for a year divided by year-end inventory levels. Inventory turn levels vary wildly across sectors and individual companies, from well over 100 for fast food restaurants to mid-to-low single digits for some types of retailers and manufacturers.