How many times you can "Turn" your money over in a year. This is expressed as a ratio of the total inventory to the annual sales. Example: If the dollar value of the inventory (a number that probably must be reported to both your banker and the government) is $5,000,000 and the annual sales is $25,000,000 the inventory turns is five. If the inventory can be reduced to $1,000,000 the inventory turns become 25. Increasing your inventory turns may require a paradigm shift by your banker who may think inventory is something of value rather than MUDA.
The ratio of annual cost of sales to inventory, commonly used as a rough measure of inventory management efficiency. Also known as inventory turnover ratio or simply turns.
The number in a given period that on-hand supplies are completely replaced. Example: If 20 items are kept on hand and 100 are ordered during a year, the number of inventory turns is 5.
The number of times the value of inventory is turned over in a year; 12 turns means that the value of inventory is turned 12 times per year or once per month.
Turns measure how fast inventory is used and replaced, computed as Total annual Cost of Goods Sold divided by Inventory. In general, higher turns are better, helping drive down invested capital.
The cost of goods sold divided by the average level of inventory on hand. This ratio measures how many times a company’s inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period.
In business management, inventory turns (IT) measures the number of times capital invested in goods to be sold turns over in a year. An item whose inventory is sold (turns over) once a year has higher holding cost than one that turns over twice, or three times, or more in that time. The real purpose of inventory reduction campaigns is to increase inventory turns, for three reasons.