Answering Listener Questions: What Does My Inventory Turnover Mean? (And Why It Matters for Cash Flow)

The Good Food CFO podcast

Jun 23, 2025•46 min

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Episode description

Your inventory numbers are telling a story - but do you know how to read it?

In this episode, Sarah answers listener questions about inventory turnover ratio - the metric that reveals whether your products are converting to cash or quietly draining your resources.

She shows how to turn a confusing ratio like "2.75" into clear insights - that inventory turnover ratio means it takes your business 146 days to sell through the product on your shelves. The eye-opener: Sarah shares how a rapidly growing meat company with impressive revenue was hemorrhaging cash because they had eight months of chicken inventory collecting freezer rent.

Listen in to learn:

Step-by-step calculations for both accrual and cash-based businesses
Why industry benchmarks miss the point
And how to interpret your number based on lead times, growth plans, and cash runway.

Essential listening for food entrepreneurs ready to make data-driven inventory decisions that protect cash flow.

BABOYOT Member Spotlight:

Amber Stevenson of Rosebud's Real Food

Learn more at www.rosebudsrealfood.com

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