Inventory turnover is how many times a business sells through its average inventory in a period, usually a year.
Higher turnover means stock converts to cash faster and costs less to hold — up to the point where it causes stockouts. What counts as good depends heavily on what you sell.
Days of inventory (365 ÷ turnover) expresses the same thing as the number of days an average item waits before it sells.
FORMULA
Inventory turnover = cost of goods sold ÷ average inventory at cost