Inventory Turnover Calculator
This inventory turnover calculator finds how many times a business sells and replaces its stock in a year, and how many days stock sits before it sells. Enter the cost of goods sold and the beginning and ending inventory, and the inventory turnover calculator returns the inventory turnover ratio, the inventory days, and the average inventory.
Results
The Inventory Turnover Calculator is part of our Inventory collection. Browse more inventory to size, convert, and check your work alongside this tool.
What the inventory turnover calculator shows
Inventory turnover, also called stock turnover or inventory turns, shows how quickly stock moves. A higher ratio means stock sells faster and less cash is tied up on shelves. The inventory turnover calculator also converts the ratio into inventory days, the average number of days an item waits before it sells.
Inventory turnover ratio formula
Turnover and days are two views of the same figure: more turns per year means fewer days per turn.
Inventory turnover calculator example
Cost of goods sold of 500,000, with 80,000 of inventory at the start and 120,000 at the end:
On average, stock is replaced five times a year and sits about 73 days before it sells.
How to use the inventory turnover ratio calculator
Enter the cost of goods sold for the year and the inventory value at the start and end of the year. The inventory turnover ratio calculator returns the turnover ratio, the days inventory outstanding, and the average inventory. Use cost values for both, not selling prices, so the ratio compares like with like.
Reading the stock turnover ratio
A good turnover depends on the industry: groceries turn very fast, while furniture or machinery turn slowly. Compare against your own history and your sector. Turnover that is too low ties up cash and risks obsolete stock; turnover that is too high can mean frequent stockouts.
When to calculate inventory turnover rate
- Reviewing stock performance with the inventory turnover calculator
- Spotting slow-moving products
- Tracking inventory days month to month
- Preparing ratios for lenders or investors
Common inventory turnover calculator mistakes
- Mixing sales and cost values. Use cost for both.
- Using only the ending inventory. Average it.
- Comparing across very different industries.
Tips for accurate results
- Use a full year of cost of goods sold.
- Average monthly inventory for seasonal businesses.
- Track the ratio by product line.
Calculating inventory days on hand
Inventory days, or days inventory outstanding, translate turnover into time. At 5 turns a year, stock waits about 73 days; at 10 turns, about 36.5 days. Cutting inventory days frees cash, but only if service holds up, so pair any reduction with a sensible buffer, which the safety stock calculator sizes from demand variability.
Calculate stock turnover by product
A company-wide ratio hides slow and fast lines. Calculate stock turnover for each product or category to find items that tie up cash, and review them for price changes, promotions, or delisting.
Inventory turns reference
| Cost of goods sold | Average inventory | Turnover | Inventory days |
|---|---|---|---|
| 500,000 | 200,000 | 2.5 | 146 |
| 500,000 | 100,000 | 5.0 | 73 |
| 500,000 | 50,000 | 10.0 | 36.5 |
| 1,200,000 | 100,000 | 12.0 | 30.4 |
Inventory Turnover Calculator FAQ
What is the inventory turnover ratio formula?
Cost of goods sold ÷ average inventory, where average inventory is (beginning + ending) ÷ 2.
How do I calculate inventory days?
Divide 365 by the inventory turnover ratio.
What is a good inventory turnover?
It depends on the industry; compare with your sector and past results.
Should I use sales or cost of goods sold?
Cost of goods sold, so both parts of the ratio use cost values.