Inventory Turnover Calculator

What this calculator does

This tool measures how many times you sell through and replace your inventory in a period, and how many days of stock you hold on average. Enter your cost of goods sold and average inventory value. It's built for product businesses — retail, e-commerce, manufacturing, distribution — where cash tied up in stock is one of the biggest hidden drains on the business.

How it works

Inventory turnover = cost of goods sold ÷ average inventory value. It tells you how many times your inventory 'turned over' during the period.

Days inventory on hand = days in period ÷ turnover. It translates turns into the average number of days a unit sits in stock before selling. Higher turns (fewer days) mean less cash frozen in inventory.

A worked example

With $600,000 in annual COGS and $100,000 in average inventory:

You sell through your inventory six times a year, holding about two months of stock on average.

How to read your result

Compare your turnover to your industry norm — grocery and fast-moving goods turn many times a year; furniture, jewelry, or heavy equipment turn far fewer. Higher turnover generally means efficient inventory and less cash tied up, but turning too fast can mean stockouts and lost sales. Too slow signals overstocking, obsolescence risk, and cash locked on the shelf. Watch the trend: falling turnover is an early sign that inventory is outgrowing demand.

Common mistakes

• ·Using sales instead of COGS. Turnover uses cost of goods sold, not revenue; using sales inflates the ratio because it includes your markup.
• ·Using a single point-in-time inventory. Use an average (e.g., beginning plus ending ÷ 2), especially if stock swings seasonally.
• ·Chasing turnover at the cost of service. Pushing turns too high can cause stockouts; balance efficiency against availability.

Frequently asked questions