Inventory Turnover is a key financial and operational metric that measures how many times a company sells and replaces its stock of goods within a specific period. It reflects the efficiency of inventory management and the balance between sales performance and stock levels. A high inventory turnover indicates strong sales or effective inventory management, while a low turnover may suggest overstocking, weak demand, or inefficiencies in the supply chain. The formula is typically calculated as Cost of Goods Sold (COGS) divided by Average Inventory. Optimal turnover varies by industry—for example, perishable goods require faster turnover compared to luxury items. Monitoring inventory turnover helps businesses improve cash flow, reduce holding costs, minimize obsolescence, and enhance profitability. Companies often benchmark their turnover ratio against industry standards to ensure competitive performance and align purchasing, production, and sales strategies with market demand.
Return on Ad Spend (ROAS)
A metric that measures the revenue earned for every dollar spent on advertising. (Revenue from Ad Campaign / Cost of Ad Campaign).
