This is calculated by dividing the cost of goods sold by the average inventory in a given period.
Inventory Turns, also commonly called stock turns, stock turnover or just turns is a business management term referring the the number of times goods are sold or used in a year.
The formula for calculating is as follows:
Items with a lower inventory turn have higher retention costs. For example, compared to an item with a one for inventory turn, another item with an inventory turn of three would have a lower holding (retention) cost. Increasing inventory turns is generally sought after for three major cost related reasons: