Inventory turnover
Inventory turnover is the number of times a business sells and replaces its average inventory over a period, calculated as cost of goods sold divided by average inventory. Higher turnover signals strong sales and lean stock; low turnover points to overstocking or weak demand. It is a core efficiency and cash-flow KPI for retailers.
How it's calculated
Divide what you sold (at cost) by the stock you held to sell it, over the same period:
Inventory turnover = cost of goods sold ÷ average inventory
Average inventory is usually (beginning + ending) ÷ 2. A turnover of 6 means you sold and replaced your average stock six times in the period.
Why it matters
Turnover is a headline efficiency and cash-flow metric — high turnover means inventory converts to sales quickly and less cash is frozen on shelves. But too high can signal you're constantly on the edge of stockouts. Shopify merchants use turnover to spot overstocked categories, benchmark SKUs against each other, and free up working capital.
Track this automatically
Logistified calculates and monitors metrics like this across your whole Shopify catalog and turns them into reorder alerts and purchase orders.