Inventory turnover calculator
Enter the cost of goods sold for a period and the inventory value at its start and end. The calculator shows how many times the stock turned over and how many days an average item sat on the shelf.
Runs in your browser: nothing you enter is sent anywhere.
How to use it
- Enter the cost of goods sold for the period (the COGS calculator can find it).
- Enter the inventory value at the start and at the end of the period.
- Keep 365 days for a year or enter the length of your period.
- Read the turnover, the days in inventory and the average inventory.
- Average inventory = (start + end) ÷ 2
- Inventory turnover = COGS ÷ average inventory
- Days in inventory = days in period ÷ turnover
Worked example
COGS for the year 500,000; inventory 90,000 at the start and 110,000 at the end:
- average inventory (90,000 + 110,000) / 2 = 100,000;
- turnover 500,000 / 100,000 = 5 times;
- days in inventory 365 / 5 = 73 days.
Tips
- If stock swings a lot during the year, average the month-end values instead of only the start and end.
- A very high turnover can mean stockouts; a falling turnover can mean slow or obsolete items.
- Use values at cost, from the same accounting method throughout.
Frequently asked questions
What is a good inventory turnover ratio?
It depends on the trade. Grocery and fresh food turn stock many times a year, while furniture, jewellery or industrial parts turn much more slowly. Compare with your own past years and with businesses like yours, not with a single number.
Why use cost of goods sold and not sales?
Inventory is valued at cost, so dividing cost of goods sold by it compares like with like. Dividing sales by inventory gives a higher number because sales include your margin.
What are days in inventory?
Days in the period ÷ turnover, also called days inventory outstanding (DIO) or days sales of inventory. A turnover of 5 a year means stock sits about 73 days on average.
Can I use a quarter or a month?
Yes. Enter the COGS for that period and its number of days, for example 90 or 30. The turnover is then for that period; multiply by the number of periods in a year for a rough yearly figure.