Inventory Turnover

Inventory Turnover measures how efficiently a business manages its stock by calculating how many times inventory is sold and replaced during a period. It’s a critical indicator of operational performance and cash flow management.

Formula:

Inventory Turnover=COGS/Average Inventory

A high turnover rate indicates strong sales or effective inventory management, while a low rate may suggest overstocking or weak demand.

Retail, FMCG, and manufacturing businesses in the UAE use this metric to optimize working capital and align procurement with market demand.