What is the definition of stock turnover?

Stock turnover, also known as inventory turnover, is a financial metric that measures how often a company's inventory is sold and replaced over a specific period, typically a year. It is calculated by dividing the cost of goods sold (COGS) by the average inventory during that period. A higher stock turnover ratio indicates efficient inventory management and strong sales performance, while a lower ratio may suggest overstocking or weak sales. This metric helps businesses assess their inventory management effectiveness and operational efficiency.