Inventory turn formula is a measure of productivity used to determine how often inventory is sold or used over a given period. It’s calculated by taking the total cost of goods sold (COGS) during a period and dividing it by the average inventory balance throughout the same period of time. This formula shows how well a company is managing its stock while simultaneously providing insight into how quickly that inventory can be converted into cash. High inventory turns usually signify an efficient operation, as they indicate that products are selling quickly and replacing themselves regularly; low inventory turns can point to sluggish sales and inefficient management. Knowing your inventory turn rate allows you to make better informed business decisions and keep your supply chain running smoothly.