What is Inventory Turnover (Number Of Days In Inventory)?

Inventory turnover is how often a company sells and replaces its inventory within a specific period.

For example, a specialty food retailer has $200,000 in average inventory and $1.2 million in annual COGS, giving it an inventory turnover ratio of 6x — meaning it sells and replenishes its entire stock roughly every 60 days, which a lender compares to industry benchmarks when assessing collateral quality.