average stock turnover ratio

average stock turnover ratio reflects how often a company sells and replaces its inventory during a given period, making it a vital metric in inventory and cash flow management. It is calculated by dividing the cost of goods sold by the average inventory value. A high stock turnover indicates efficient sales and inventory replenishment, while a low ratio may signal overstocking or weak demand. E-commerce businesses use this figure to decide when to reorder products and identify slow-moving items. Monitoring the average stock turnover ratio helps optimize purchasing cycles, improve warehouse space usage, and increase overall profitability through more informed operational planning.