Stock Turn Calculator Explained:
(a) What is this? This calculator tells you your stock turn, or how many times in a year you move all of the stock.
(b) What does this tell me? This calculator generates a stock turn number which is an annual number. However, there is no need to enter annual numbers particularly, as long as the numbers you enter are for the same time frame you will have an accurate result. Stock turns numbers are however, annual numbers. For example, if the number says you have a stock turn of 5.2, this means you sell all the stock 5.2 time s a year.
(c) Why should I use it? To help you manage your stock. Too much stock becomes expensive for a business as you need to pay the suppliers/vendors for the stock. If the stock turn is fast enough, you will have sold the stock before you have to pay for it. If the stock turn is too fast, you spend a lot of time re-stocking and this can be inefficient and you will suffer out of stocks and lost sales. There are also impact impacts such as holding costs.
(d) Caution: While this equation says you should enter annual sales, you can enter sales for a lessor time frame to manage the stock more tightly if this is required. Remember however, Stock Turn is normally an annual number. This calculator doesn't tell you to increase of decrease stock levels, but it does let you monitor the stock and allows you to make more informed decisions.