What Is Stock Turnover?


Quick Answer

In business finance, stock turnover refers to the number of times a company sells its goods and then replaces the supply in a given period, such as one year. That number is arrived at by using a ratio in which the cost of goods sold, or COGS, is divided by the average inventory.

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Full Answer

Stock turnover is more commonly known as inventory turnover. Companies want to avoid low cost turnover because it's generally a sign of poor inventory management that reflects overspending and a lack of sales efficiency. This incurs a higher risk of loss as goods sit in the warehouse losing potential value.

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