Stock turn

Also called Inventory turnover, Stock days, Stockholding

How many times a year you sell and replace your stock. Money sitting on shelves is money not doing anything.

What it means

Stock turn is cost of sales divided by average stock value: how many times the stock is sold and replaced in a year. Stock days is the same idea expressed as how long an item sits before selling.

Why it matters

Stock is cash you have already spent. Improving stock turn releases working capital without any change in sales.

It is also where losses hide. Slow-moving stock is usually worth less than its book value, and the balance sheet will keep saying otherwise until someone writes it down.

What it looks like in practice

Calculate it by product group rather than overall. The average is meaningless when a few fast lines subsidise a long tail.

Rank stock by value and by movement. The lines that are high value and slow moving are where the cash is trapped.

Clear obsolete stock even at a loss. The loss already happened; you are choosing whether to keep funding it.

What to watch out for

Bulk discounts that improve the unit price and destroy the cash position. A 5% discount for six months of stock is expensive money.

Stock counts that never happen. Book stock and actual stock diverge, always.

Where to get proper advice

Your accountant on valuation and write-downs. Your own sales data for the movement analysis.