Definition
Inventory turnover
How many times average inventory is used and replaced during a period, a speedometer for how hard your beverage capital is working.
Formula
Turnover = cost of goods used ÷ average inventory cost for the period
Worked example
Quarterly COGU $54,000. Average inventory cost (start+end)/2 = $18,000. Turnover = 3.0 for the quarter (about 12× annualized if steady). Well vodka turning 8× while an allocation scotch turns 0.4× can both be healthy if the scotch is intentional cellar depth.
When operators use this
Read turnover by category, not as one house number. Well vodka should turn. Library wine and allocated scotch may sit on purpose. dead stock is the no-sales cousin. wine shops is the room where slow turn is often the product.
Common mistakes
Annualizing a four-week spike, or judging a cellar by a well-vodka target, produces a cleanup list that hurts the program. Average inventory that uses a holiday peak as the 'start' will also lie. Use comparable counts at both ends of the period.
How ExactPour handles it
ExactPour pairs usage and on-hand value so slow movers and fast wells are visible by product. Combined with dead-stock windows and pars, turnover becomes an ordering input rather than a once-a-year accounting ratio.
Qualification
Turnover targets differ by category; slow turnover in aged spirits or cellared wine can be intentional rather than a problem.