Inventory Turnover Ratio measures how many times a business sells and replaces its stock over a given period (typically 1 fiscal year). Formula: Inventory Turnover Ratio = Cost of Goods Sold (COGS) ÷ Average Inventory. Average Inventory is (Beginning Inventory + Ending Inventory) ÷ 2.

Days Sales of Inventory (DSI), also known as Days to Sell Inventory, indicates the average number of days stock sits on shelves or in the warehouse before being sold. Formula: DSI = 365 ÷ Inventory Turnover Ratio. A lower DSI represents high liquidity and fast-moving merchandise.

Sales Revenue includes profit markup, whereas inventory on balance sheets is recorded at cost price (or net realizable value per Nepal Accounting Standards NAS 02). Using Sales Revenue artificially inflates the turnover ratio. Using Cost of Goods Sold (COGS) ensures apple-to-apple valuation.

A low turnover ratio (< 3.0 in retail or apparel) means cash is trapped in slow-moving stock. This incurs heavy bank interest costs on overdrafts, causes warehouse congestion, and increases the likelihood of stock obsolescence and dead-stock write-downs.

ByaparOS automatically categorizes products using real-time ABC/FSN analysis (Fast, Slow, Non-moving). Managers receive automated notifications for items that exceed 60 or 90 days without sales, allowing targeted discounts or promotional bundling before goods turn into dead stock.