High turnover means strong sales or lean inventory; low turnover can mean overstocking or weak demand. Compare with competitors – supermarkets turn stock far more often than furniture stores.
How to use the Inventory Turnover Calculator
- Cost of goods sold
- Beginning inventory
- Ending inventory
- Days in the period
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter cost of goods sold and beginning and ending inventory.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Cost of goods sold | Amount in your currency |
| Beginning inventory | Amount in your currency |
| Ending inventory | Amount in your currency |
| Days in the period | A number |
What each result means
- Inventory turnover = [Cost of goods sold]÷(([Beginning inventory] + [Ending inventory])÷2)
- Days to sell inventory = [Days in the period]÷[Inventory turnover]
- Average inventory = ([Beginning inventory] + [Ending inventory])÷2
Example values
How the main result changes when Cost of goods sold changes and everything else stays at the example values above:
| Cost of goods sold | Inventory turnover |
|---|---|
| 450,000 | 3 |
| 675,000 | 4.5 |
| 900,000 | 6 |
| 1,125,000 | 7.5 |
| 1,350,000 | 9 |
| 1,800,000 | 12 |
Formula
Inventory turnover = COGS ÷ average inventoryAverage inventory = (beginning + ending) ÷ 2Days to sell = days in period ÷ turnoverWorked example
Inputs — Cost of goods sold: $900,000; Beginning inventory: $140,000; Ending inventory: $160,000; Days in the period: 365.
Results — Inventory turnover = 6; Days to sell inventory = 60.8 days; Average inventory = $150,000.00.
Frequently asked questions
What is a good inventory turnover ratio?
5–10 for many retailers; it varies widely by industry.
Should I use sales or COGS?
COGS is more accurate because inventory is valued at cost.
How can I improve inventory turnover?
Stock less slow-moving inventory and improve demand forecasting.
What formula does the Inventory Turnover Calculator use?
Inventory turnover = COGS ÷ average inventory.