As a business owner, key performance indicators (KPIs) are incredibly important in tracking the success of your retail business. Identifying and using those KPIs can help you understand how your buying, inventory, and selling strategies are affecting your business. If you’re using an advanced POS and inventory management system, you have access to all the data you need to review to determine how your business is performing.
Turnover is a great metric that can help you understand how your inventory is performing in your store. Let’s take a closer look at how using Turnover as a KPI in your business can help you make better decisions about your business.
What it means
Turnover is a ratio showing how many times a company’s inventory is sold and replaced during a given period. The ratio is annualized for consistency.
How to find it
Turns = Cost of Goods Sold (COGS) during Sales Period/Inventory Cost over Sales Period * 365
How it’s used
Turns are used to measure how quickly your inventory is sold.
Things to consider
This ratio only measures how quickly your inventory is being sold, but does not take into consideration how much profit was generated when the sale was made.
To learn more about using KPIs and your data to improve your business, download our Increasing Profits Now guide.