What is Stock Turnover Rate?


In today's business world, inventory management holds critical importance for any enterprise. This management plays a vital role in both financial stability and customer satisfaction. By closely monitoring inventory turnover ratio, businesses can enhance their efficiency, manage cash flows, and respond to customer demands more swiftly. In this article, we will focus on the important concept of "Hiosis" and "Inventory Turnover Ratio" utilized in inventory management by businesses.

What is Hiosis? Hiosis, originating from Japan, translates to "inventory movement" or "inventory circulation." Businesses use Hiosis to measure the cycle of their inventory and the speed at which this cycle occurs. It serves as a performance metric indicating how quickly an enterprise's inventory is turning over.

What is Inventory Turnover Ratio? Inventory turnover ratio represents the number of times a business's inventory is sold and replaced over a certain period. It is typically calculated on an annual basis using the following formula:

Inventory Turnover Ratio = (Sales Revenue) / (Average Inventory Value)

Here, "average inventory value" represents half the total of starting and ending inventories for a specific period. A higher inventory turnover ratio indicates that the business is selling its inventory rapidly, thereby increasing inventory efficiency. A higher turnover ratio can reduce inventory costs and improve cash flow.

The Importance of Inventory Turnover Ratio: Inventory turnover ratio is a crucial metric for assessing operational efficiency in businesses. A high turnover ratio indicates that the business can convert inventory into cash more quickly, thereby enhancing financial stability and improving capital efficiency. Additionally, it can enhance customer satisfaction by enabling faster responses to customer demands.

To increase inventory turnover ratio, businesses should focus on improving inventory management processes, accurately forecasting demand, optimizing inventory levels, and streamlining supply chain processes. These are just a few strategies aimed at increasing inventory turnover ratio.

Conclusion: Hiosis and inventory turnover ratio are essential metrics used to evaluate efficiency in inventory management for businesses. A high inventory turnover ratio can improve financial stability and enhance customer satisfaction by swiftly converting inventory into cash. By optimizing inventory management processes and adopting appropriate strategies, businesses can increase inventory turnover ratio, thereby enhancing their competitiveness and ensuring sustainable growth in the long term.


We use cookies in accordance with legal regulations to improve your experience. For detailed information Cookie Policy You can reach via