What is inventory turnover?
Inventory turnover measures how many times you sell through and replenish your stock over a period. It is one of the clearest signals of how efficiently your working capital is used: the faster stock turns, the less cash sits idle on the shelf. Two figures describe the same thing — the turnover ratio (how many times) and days inventory outstanding, DIO (how many days).
| Measure | Formula | Example |
|---|---|---|
| Turnover ratio | COGS / average inventory | 1,200,000 / 300,000 = 4× |
| Days inventory outstanding (DIO) | period days / turnover ratio | 365 / 4 = 91.25 days |
In this example the stock turns over 4 times a year and a product sits on the shelf for about 91 days on average. Keep both sides at cost value: use cost of goods sold (not revenue) in the numerator, and inventory valued at cost in the denominator — otherwise the ratio comes out inflated.
How to read the result
A low turnover (long DIO) means cash is locked in stock: carrying, storage and opportunity costs run while the product ages, and dead-stock risk grows. A high turnover (short DIO) means capital is used efficiently — but pushed too far it brings stock-outs and missed sales. There is no single right number; the healthy level depends on your sector, margins and product mix. The most useful comparison is against your own past periods and your sector average.
Turnover, cost and cash flow
Turnover starts with the right cost base. Your COGS is only as accurate as your unit product cost, so build it up first with the product cost calculator. On a marketplace, slow-moving stock quietly eats into profit through discounts and returns — to see your real net margin per sale after commission, shipping and VAT, use the Trendyol profit calculator, and to price a clearance campaign without slipping below break-even, check the profit margin calculator.