Inventory Turnover ~ (aliases: inventory turns, stock turn, turn rate, turns)
How many times a year you sell and replace your average stock.
The fork, why two teams get different numbers
Numerator basis and inventory denominator. Numerator: Cost of Goods Sold (the finance
and APICS standard) vs Net Sales/revenue (an entrenched retail-merchandising habit).
Denominator: average inventory across the period vs ending inventory, valued at cost
vs at retail. Owners: finance uses COGS ÷ average inventory at cost; retail buyers
often use sales ÷ inventory, mixing a retail-priced numerator with a cost or retail
denominator, a different, non-comparable number.
The trap
A sales-based turn is inflated by gross margin relative to the cost-based turn on identical stock, a 40%-margin product shows ~1.67× more "turns" purely from the pricing in the numerator, not from moving faster.
- The full trap, worked on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: APICS/SCOR · GAAP/ASC 330 (inventory valuation)