Inventory turnover definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Inventory turnover can be defined as: Number of times a company’s average inventory is sold during a period; computed by dividing cost of goods sold by average inventory; also called merchandise turnover. Inventory turnover gives some idea of how long it takes to turn over or the number of times inventory is sold for a period. Inventory turnover can be a useful number to help improve the efficiency of inventory and the cost of holding inventory.
