No matter where you live, if you walk through the business district of the nearest town and ask each succssful business owner what their inventory turnover rate is, they will likely be able to tell you right off the top of their head. The answers will vary, but if they’ve been in business for very long they will know what it is and you will get answers such as 3.7, 4, 5.2, etc.

They know because inventory turnover rate can determine whether a business just survives or flourishes; succeeds or fails.

What Is Inventory Turnover?

Inventory turnover rate measures how quickly you are moving inventory through your business.

In the simplest terms, inventory turnover rate is your cost of the product you sell over a twelve month period divided by your average investment in the product over the same twelve month period.
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