Inventory Turnover Calculator
CheckedUse this inventory turnover calculator to see how many times stock sells through in a year and how many days it sits on the shelf. Free, no sign-up, and the result updates as you type.
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Both sides of this ratio must be at cost. Dividing revenue by inventory is the standard mistake and it inflates the answer by roughly your markup, so a business genuinely turning stock three times a year reports six and concludes its buying is fine. Use COGS on top and average inventory at cost underneath. The days figure is the useful one day to day: six turns sounds abstract, sixty-one days of stock on hand tells you exactly how long your cash is tied up.
How it's calculated
Inventory turnover = COGS ÷ average inventory Days of inventory = 365 ÷ turnover Sell-through = units sold ÷ units received × 100
LaTeX source
\text{Turnover} = \frac{\text{COGS}}{\frac{\text{Opening} + \text{Closing}}{2}} \qquad \text{Days} = \frac{365}{\text{Turnover}} Worked examples
A healthy year at six turns
6.00 turns, 60.8 days of inventory
Average inventory is ($45,000 + $35,000) ÷ 2 = $40,000, and $240,000 of COGS over that is 6 turns a year — about 61 days of stock on hand. Sell-through of 95% says almost everything received went out again, so the stock reduction was deliberate rather than a shortage.
The numbers used
- Cost of goods sold
- 240000
- Opening inventory
- 45000
- Closing inventory
- 35000
- Units sold
- 9500
- Units received
- 10000
A slow-moving catalogue
2.01 turns, 181.8 days of inventory
Average inventory of $19,850 against $39,850 of COGS is just 2.01 turns — six months of stock sitting on the shelf. Inventory grew while sell-through ran at 89.6%, which is the pattern that precedes a markdown: buying is outrunning selling by about 250 units a period.
The numbers used
- Cost of goods sold
- 39850
- Opening inventory
- 18400
- Closing inventory
- 21300
- Units sold
- 2150
- Units received
- 2400
Questions sellers ask
How do you calculate inventory turnover?
Divide cost of goods sold by average inventory, where average is opening plus closing divided by two. $240,000 of COGS over $40,000 of average inventory is 6 turns. Keep both at cost — using sales revenue on top overstates the ratio by your markup, which is the most common way this number gets reported wrong.
Is 1.5 a good inventory turnover ratio?
For most retail it is low: 1.5 turns means 243 days of stock on hand, so cash sits in inventory for eight months. It is normal for jewellery, furniture and machinery, where slow, high-value stock is the business model. For consumables or fashion it signals overbuying, and the fix is smaller, more frequent orders rather than a bigger discount.
Which is a good inventory turnover ratio?
General retail typically runs 4-6 turns, groceries and fast-moving consumer goods 12 or more, and big-ticket categories 1-2. The honest test is whether days of inventory comfortably exceeds your supplier lead time — turning eight times a year is no use if restocking takes 90 days and you run out at day 45.
How many times should inventory be turned over per year?
Enough that stock covers lead time plus a safety buffer, and no more. Work backwards: a 60-day lead time with 30 days of safety stock means holding about 90 days, or roughly 4 turns. Chasing a higher number than that trades stockouts for a ratio, and a lost sale costs more than a few weeks of storage.
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