Inventory Turnover Calculator
Calculate how many times your inventory is sold and replaced over a period, plus the average days stock is held.
Your results
Calculation breakdown
- Turnover ratio
- COGS ÷ Average inventory value
- Days in stock
- 365 ÷ Turnover ratio
Worked example
A retailer with $300,000 COGS and $50,000 average inventory turns stock over 6 times a year, or about every 61 days.
Assumptions
- Average inventory is typically the mean of opening and closing stock value.
- Use figures from the same 12-month period for an annual ratio.
- Turnover benchmarks vary greatly between industries, e.g. fresh food vs hardware.
How this calculator works
Divide cost of goods sold by average inventory value to see your inventory turnover ratio, then convert that into the average number of days stock sits before selling.
Frequently asked questions
What is average inventory value?
Typically the average of your opening and closing stock value for the period, giving a smoother figure than a single point-in-time count.
Is a higher turnover ratio always better?
Generally yes for cash flow, but too high can mean you're understocked and risking lost sales; balance depends on your industry.
How does this relate to cash tied up in stock?
Slower turnover means cash is tied up in stock for longer, which can strain cash flow even in a profitable business.
Results are estimates only and are not financial, tax, legal or credit advice.