Inventory turnover is the standard at which product inventory is acquired or made and further sold within a year. An assessment of all inventory-related business factors will have an impact on inventory turnover.

Generally inventory turnover period is calculated as: Sales/Inventory Also by, Cost of Goods Sold/ Average Inventory

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

and

Average Inventory = ( Beginning Inventory + Ending Inventory ) / 2

The annual inventory turnover in the retail painting industry is obtained by dividing the Annual Cost of Sales by the Average Inventory Level. A low inventory turnover ratio is a signal of inefficiency.

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