Inventory turns

Stock turnover measures how often the shelves empty in a year. It is the clearest link between the way a shop buys and the state of its bank account.

Converting to days

Days are easier to act on than a ratio. A shop holding ninety days of stock is financing three months of purchases before a single sale, and that number can be compared directly against supplier payment terms.

Per group, not overall

An overall figure averages fast lines with dead ones, which is exactly the information needed and exactly what the average destroys. Split by product group, the picture is usually that a minority of lines turns quickly and the rest sits.

What slow stock costs

• Cash locked in goods that could fund faster lines
• Storage space and handling
• Value lost as items age, in fashion and technology especially
• A discount at the end, which removes the margin the purchase was made for