 Hello in this lecture we will define inventory turnover. According to fundamental accounting principles wild 22nd edition the definition of inventory turnover is number of times a company's average inventory is sold during a period computed by dividing cost of goods sold by average inventory also called merchandising merchandise turnover. So what we're trying to determine is going to be in calculation and we're trying to estimate the average inventory that is sold during a particular time period. So if we sell inventories such as t-shirts we're looking for the average inventory sold to customers for a particular time period calculation will be the cost of goods sold which is going to be the income statement account the expense account we're going to divide that by the average inventory. It can be confusing to know what the average inventory is because the inventory of course is as of a point in time in the balance sheet so we're usually going to take the ending inventory we're going to add that to what the beginning inventory is for the time period which is equivalent to last period's ending inventory and add those up divide by two the idea being that that will give us kind of the average of what inventory should be at any given point during that particular time period