Inventory turnover measures how many times inventory is sold and replaced within a specific period (usually annually). It is calculated as Cost of Goods Sold divided by Average Inventory Value. Higher turnover indicates more efficient inventory management.
Inventory turnover directly impacts cash flow, storage costs, and IPI score on Amazon. Products that sit in FBA warehouses incur monthly storage fees and long-term storage surcharges, eroding margins significantly.
RIDGE reports include inventory planning with recommended order quantities, reorder points, and turn rate projections based on estimated sales velocity and seasonality patterns.
A product with $120,000 annual COGS and $20,000 average inventory has 6x inventory turnover — meaning inventory fully cycles every 2 months. This is healthy for most Amazon categories.
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