Stock Turnover Report
Stock Turnover or Stock Turn is a measure of how quickly stock is converted to cash (sales). Use this
report to see what stock is, and is not, working well and to assist in setting min & max levels.
In this guide we’ll cover:
1. What is Stock Turn
2. Stock out days
3. How to use this report
Part One - What is Stock turn
Stock turn is a measure of how quickly I turn stock into cash (PROFIT)
Stock turn = Sales / average value of stock on hand
or
Revenue from sales of stock / average cost of stock holding (money tied up)
Sales
$1000.00
$1000.00
Average on hand
$500.00
$250.00
Stock Turn Rate
2.0
4.0
What is a good number ?
The higher the number the better, the number will change as you adjust the date range that you are
running the report over.
Week
Month
Quarter
Year
Stock turn = 1.0
Stock turn = 1.0
Stock turn = 1.0
Stock turn = 1.0
every $100 invested
in product, I sell it 1x
every week
every $100 invested
in product, I sell it 1x
every month
every $100 invested
in product, I sell it 1x
every quarter
every $100 invested
in product, I sell it 1x
every year
High rate of return
Low rate of return
(quickly turn my
investment in stock,
into cash)
(slowly turn my
investment in stock,
into cash)
Tip: Use this report regularly with the same sales period (such as 4 weeks) to learn what a good
and bad stock turn number looks like.
1 | Page
www.kitomba.com
v0514
A higher stock turn could justify buying more stock at a lower margin. Consider this example:
Product A
Product B
Retail Price $29.99
Retail Price $29.50
Cost Price $7.98
Cost Price $10.42
Margin 69%
Margin 59%
Margin (excl gst) $18.10
Margin (excl gst) $15.23
In this example Product A has a higher margin than product B, if you didn’t look at the stock turn you
could choose to stock a higher number of Product A. It appears it will make you more money.
When Stock turn is included, you can see that Product B will give you a much faster return on your
investment.
Product A
Product B
Retail Price $29.99
Retail Price $29.50
Cost Price $7.98
Cost Price $10.42
Margin 69%
Margin 59%
Margin (excl gst) $18.10
Margin (excl gst) $15.23
Stock Turn = 1
Stock turn = 10
Tip: If you export the Stock Turnover Report you will get a combination of the Kitomba Stock
Turnover and Stock Statistics reports which includes the margin and more.
Part Two - Stock out days
2 | Page
www.kitomba.com
v0514
Stock out days are the number of days when you don’t have that product in stock.
1. Stock out days are not a bad thing for low stock turn products
2. Low stock turn + zero stock out days could mean that you are holding too much stock
3. High stock turn + stock out days could mean that you are not holding enough stock
Part Three- Using the Stock Turnover Report to improve your Stock Turn
The stock turnover report can be used to assist in setting min & max levels. It can help you to see
which products turn your investment into profit faster.
●
A product with a low stock turn and zero stock out days indicates that you are probably
holding too much stock, or that you could consider dropping this item.
● A product with a high stock turn number and high stock out days shows a missed opportunity
to sell more of this item. You could increase your minimum and maximum levels or your
frequency of ordering or both.
Look out for an asterisk next to the stock turn number, this means that the stock on hand for this
item has gone into a negative value over the date range. This should never happen and indicates
your stock levels in Kitomba are inaccurate. To avoid this you can do regular stocktakes.
3 | Page
www.kitomba.com
v0514