What is the turnover rate?
The turnover rate is a key figure in logistical warehousing. It describes how often a good or an item leaves / is sold in a certain period of time. In most cases, this key figure is extrapolated to one year. The turnover rate forms the basis for the purchasing strategies of companies and the optimization of the storage of goods.
This is how the turnover rate is calculated
The turnover rate is calculated as follows:
- Revenue from inventories / average capital employed = inventory turnover rate
- Goods handled (total) / average inventory = turnover rate
For example, if a company has revenues of EUR 400,000 per year with an average capital employed of EUR 80,000, the turnover rate is five. So five times a year the entire stock is sold and replaced by a new one.
Since the storage of goods ties up capital and also entails costs, a high turnover rate is to be aimed for. The higher this key figure, the shorter the storage period and thus the lower the costs.
