What are turnover and churn?
Turnover is an accounting concept used to describe how quickly a business conducts its operations. Turnover is usually measured by seeing how fast a company sells items from its inventory or how fast it collects its accounts receivables. Turnover is calculated by taking a company’s COGS and dividing it by their average inventory (COGS/Average Inventory). The resulting figure represents how many times throughout the year a company had sold out its inventory. In a retail setting, this number would be compared to industry averages or nearby vendors to gauge the comparative success a business has got its inventory out.
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