Inventory Turnover Calculator
Calculate inventory turnover (times sold per year) and days inventory outstanding from cost of goods sold and average inventory. Educational. Runs in your browser.
For the period (usually a year).
(Beginning + ending) ÷ 2 is typical.
Inventory turnover = cost of goods sold ÷ average inventory — how many times stock is sold and replaced over the period. Days in inventory = days in period ÷ turnover, the average time an item sits before sale. Higher turnover (fewer days) means leaner stock and less cash tied up, but too high can risk stockouts. Norms vary widely by industry — grocers turn far faster than jewelers. Educational; everything runs in your browser.
About this tool
Inventory turnover measures how many times a business sells through and replaces its stock over a period, and it is one of the clearest gauges of how efficiently a company manages inventory. The ratio is cost of goods sold divided by average inventory: COGS is used rather than revenue because inventory is carried at cost, so dividing cost by cost keeps the comparison consistent. Average inventory is normally the beginning and ending balances averaged, which smooths out seasonal swings. A turnover of 6 means the company cycled through its entire inventory six times during the year. The companion figure, days inventory outstanding (also called days in inventory), is days in the period divided by turnover — the average number of days an item sits in stock before it is sold. The two say the same thing in different units: high turnover equals low days in inventory. Faster turnover ties up less cash in unsold goods, reduces storage and obsolescence costs, and signals strong demand or tight stock management — but pushing it too high risks stockouts and lost sales. As always, the right level is industry-specific: grocery and fast-fashion retailers turn inventory many times a year, while furniture, machinery, or jewelry sellers turn far more slowly by the nature of their products. Track the trend and benchmark against direct competitors rather than an absolute target. This is educational. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter cost of goods sold (COGS) for the period — not revenue.
- Enter average inventory, typically (beginning + ending inventory) ÷ 2.
- Set the days in the period (365 for a year).
- Read inventory turnover (times per period) and days inventory outstanding.
Frequently asked questions
- How is inventory turnover calculated?
- Inventory turnover = cost of goods sold ÷ average inventory. For $500,000 COGS and $100,000 average inventory, turnover is 5×, meaning the stock was sold and replaced five times over the period.
- Why use COGS instead of revenue?
- Inventory is recorded at cost, so dividing cost of goods sold (also at cost) by average inventory compares like with like. Using revenue would inflate the ratio because revenue includes the profit markup.
- What is days inventory outstanding?
- Days inventory outstanding = days in period ÷ turnover. It is the average number of days an item stays in inventory before being sold. A turnover of 5 over 365 days equals 73 days in inventory.
- What is a good inventory turnover ratio?
- It varies enormously by industry. Grocers and fast-fashion retailers turn inventory dozens of times a year; furniture, machinery, and jewelry far fewer. Compare to direct peers and to your own trend rather than a universal number.
- Can turnover be too high?
- Yes. Very high turnover can mean inventory is too lean, raising the risk of stockouts and lost sales. The goal is balancing low carrying cost against reliable availability.
- Is anything uploaded?
- No. All calculations run entirely in your browser.