What does an inventory turnover ratio of 1.5 mean?

An inventory turnover ratio of 1.5 means the company sells and replaces its inventory one and a half times during a given period. This often points to slower movement, which may indicate low sales or inventory levels that exceed market demand. The number gains meaning when compared with similar businesses or previous periods and may suggest that the company holds more finished goods or raw materials than needed.

Is 2 a good turnover ratio?

A turnover ratio of 2 can be healthy or concerning, depending on the industry and the pace of customer demand. Some categories naturally move slowly, so a ratio of 2 may fall within the normal range. Faster-moving categories may see it as a sign of weaker performance. Retailers often review this number alongside financial modeling to understand whether a ratio of 2 reflects steady sales or slow-moving stock.

How do you calculate inventory turnover in Excel?

Excel can calculate inventory turnover once COGS and average inventory value are available. If COGS is in cell B2 and the average inventory value is in cell B3, entering =B2/B3 returns the turnover ratio for the selected period. This formula helps retailers compare performance across months, seasons, or product categories.

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The Inventory
Planner Blog

Inventory Turnover Ratio Explained: What It Means and How to Improve It

Say Goodbye to Overstock: How Purchasing Automation Can Optimize Your Inventory

Supply Chain Inventory Optimization: Improve Efficiency Across Your Entire Network

How Data-Driven Inventory Planning Boosts Profitability for Retailers and E-Commerce Brands

How to Avoid Stockouts and Keep Your Inventory Flowing

Stock Optimization Strategies: Balancing Max Inventory with Demand

How Automating Purchase Orders Saves Time and Reduces Errors

How to Calculate Inventory Accuracy

Cycle Count Accuracy Formula: How to Improve Your Inventory Accuracy

Maximize Profits by Optimizing Stock Levels by Demand

Maximizing Shopify Inventory Efficiency

Optimize Your Buying Budgets with Advanced Open-to-Buy Planning Tools

Smarter inventory planning starts here

The Inventory Planner Blog

Inventory Turnover Ratio Explained: What It Means and How to Improve It

Say Goodbye to Overstock: How Purchasing Automation Can Optimize Your Inventory

Supply Chain Inventory Optimization: Improve Efficiency Across Your Entire Network

How Data-Driven Inventory Planning Boosts Profitability for Retailers and E-Commerce Brands

How to Avoid Stockouts and Keep Your Inventory Flowing

Stock Optimization Strategies: Balancing Max Inventory with Demand

How Automating Purchase Orders Saves Time and Reduces Errors

How to Calculate Inventory Accuracy

Cycle Count Accuracy Formula: How to Improve Your Inventory Accuracy

Maximize Profits by Optimizing Stock Levels by Demand

Maximizing Shopify Inventory Efficiency

Optimize Your Buying Budgets with Advanced Open-to-Buy Planning Tools

Smarter inventory planning starts here

The Inventory
Planner Blog