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Definition
Stock turnover (inventory turnover) is the number of times a company sells and replaces its stock over a period, calculated as cost of sales divided by average stock. Higher turnover means stock moves quickly.
In plain terms
It shows whether your stock is flying off the shelves or gathering dust. Slow turnover ties cash up in inventory you haven't sold yet.
Why it matters for your company
Improving stock turnover releases working capital and shortens your cash conversion cycle. See working capital management.
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