Five Minute Friday: Your Inventory Is Cash—Here’s How to Turn It Faster

In this episode of Five Minute Friday, we’re continuing our Know Your Numbers series by breaking down another retail metrics—your turn—and how it directly impacts your cash flow and profit.

If you’ve ever had great margins on paper but no cash in the bank, this episode will show you how to calculate your turn, understand how quickly your inventory “spoils,” and apply strategies to move product faster so you can keep money flowing through your business.

🔑 Key Takeaways:

Understand What Turn Really Means

• Learn the definition of turn rate and how it measures how many times you sell through your inventory in a given period.

• Understand why a high margin doesn’t always mean more cash—and why turn is a better cash flow indicator.

How to Calculate Your Turn

• Use the simple formula: Total Sales ÷ Average Inventory at Retail.

• Identify your category benchmarks (e.g., women’s fast fashion: 5–6 turns/year; luxury: 3.5–4.5 turns/year; home & gift: slower turns).

Prevent “Spoiling” Inventory

• Learn the expiration dates for your category’s inventory and when to take markdowns to free up cash.

• Recognize when merchandise is aging past its prime and how to move it before it becomes dead stock.

Pro Strategies to Improve Turn

• Track your on-hand inventory monthly to know exactly how much cash is tied up on the floor.

• Invest in faster-turning categories to improve ROI.

• Use marketing tools—social media, email campaigns, store placement—to push slow movers before resorting to markdowns.

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