annual sales ÷ stocks
Stock turnover is more specific than asset turnover. It measures how well the company is making use of the part of its working capital that has been invested in stock.
Stock turnover is the main component of asset turnover for companies that have little tied up in fixed assets but hold large amounts of stock, usually trading rather than manufacturing companies. For more capital intensive businesses fixed asset turnover becomes more important.
(stocks ÷ cost of sales) × 365
Stock days is a useful number largely because it makes it easier to see how changes in stock days, debtor days and creditor days combine to change the working capital ratio.