1. What is Total Turnover?

Total Turnover, also known as Inventory Turnover, measures how many times a company sells and replaces its inventory during a given period. It indicates the efficiency of inventory management and sales performance.

2. How Does the Calculator Work?

The calculator uses the turnover formula:

Where:

• \( Sales \) — Annual Cost of Goods Sold (COGS) or Revenue
• \( Average\ Inventory \) — (Beginning Inventory + Ending Inventory) ÷ 2
• \( Turnover \) — Number of times inventory is sold and replaced per year

Explanation: The formula calculates how efficiently a company manages its inventory by comparing sales to average inventory levels.

3. Importance of Turnover Calculation

Details: Inventory turnover is crucial for assessing operational efficiency, identifying slow-moving inventory, optimizing stock levels, and improving cash flow management.

4. Using the Calculator

Tips: Enter sales in currency units, beginning and ending inventory values in currency units. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good turnover ratio?
A: Ideal turnover ratios vary by industry. Generally, higher ratios indicate better inventory management, but extremely high ratios may suggest stockouts.

Q2: Should I use COGS or Revenue for sales?
A: COGS is preferred as it reflects the actual cost of inventory sold, but revenue can be used if COGS is not available.

Q3: How often should turnover be calculated?
A: Typically calculated annually, but can be calculated quarterly for more frequent monitoring of inventory performance.

Q4: What does a low turnover ratio indicate?
A: Low turnover may indicate overstocking, slow-moving inventory, or poor sales performance.

Q5: Can turnover be too high?
A: Yes, extremely high turnover may indicate inadequate inventory levels leading to stockouts and lost sales opportunities.