Inventory
Inventory turnover
How many times you sell through your average stock in a year.
Formula
COGS ÷ average inventory at cost
Inventory turnover is cost of goods sold divided by average inventory at cost: how many times a year the shelf empties and refills. A turnover of four means the same capital earned margin four times, which is why it is the inventory counterpart to margin itself.
Higher is usually better, because the same capital earns margin more often, but pushed too far it becomes stockouts, and a stockout on a winning product costs more margin than slow stock ever ties up.
It is the inventory counterpart to margin: two stores with the same CM1 can have very different returns on the money they tie up, and the one turning stock six times needs half the capital to earn the same year.
Both sides of the division depend on honest unit costs at honest dates, which is exactly what Shopify's COGS report cannot hold: one cost field per variant means last year's turnover changes every time a supplier reprices.
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