Inventory Turnover Definition – What is Inventory Turnover?

Accounting Glossary 

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.