Inventory Turnover Calculator

How fast stock moves off your shelves and gets replaced says a great deal about how well a business runs. Inventory turnover captures that pace, flagging both the stockouts and the overstocking that quietly erode profit. Read alongside cash flow, the metric helps sharpen purchasing decisions.

The ratio itself comes from dividing Cost of Goods Sold (COGS) by Average Inventory. Divide the number of days in the period by that result, 365 for a year or 91 for a quarter in this calculator, and you have Days in Inventory, the average number of days a unit waits before it sells. Together the two figures show how many times stock cycles through over a period and how long it tends to sit.

Accuracy hinges on matching the time periods you use for COGS and Average Inventory; mismatched windows skew the outcome. Substituting sales revenue for COGS is the error that trips people up most, since it inflates turnover and overstates efficiency. Benchmarks also swing hard by sector, since a grocer selling perishables turns its stock far more often than a seller of luxury goods, so compare against businesses like yours. The calculator's rating uses the annualized figure: 12 or more is Excellent, 6 to under 12 Good, 4 to under 6 Average and below 4 Slow.