About this Inventory Turnover
Inventory Turnover measures how many times you sold and replaced your inventory in a given period. It's a critical efficiency metric for retailers. High turnover means you are selling goods fast; low turnover means stock is sitting on shelves.
Who this calculator is for
- Retail, ecommerce, and operations teams measuring stock efficiency.
- Finance teams checking how much cash is tied up in average inventory.
- Operators benchmarking whether current buying levels match sales velocity.
When to use it
- Turn annual COGS and inventory balances into a turnover ratio and days-on-hand view.
- Compare product lines, stores, or periods to see where stock is moving too slowly.
- Check whether improved purchasing or merchandising is reducing inventory drag.
How to use this calculator
- Enter Cost of Goods Sold (COGS) for the year.
- Enter Beginning Inventory value.
- Enter Ending Inventory value.
Key assumptions
- This tool uses the average of beginning and ending inventory as a simple proxy for average stock held over the period.
- COGS and inventory balances should be measured for the same business unit and accounting period.
- If average inventory is zero or negative, turnover is undefined rather than infinitely efficient.
- If COGS is zero while average inventory is positive, the turnover ratio and days-to-sell result are also treated as undefined in this model.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Ratio = COGS / Average Inventory.
Days Sales of Inventory (DSI) = 365 / Ratio.
Inputs explained
COGS
Cost of Goods Sold. The direct costs of producing the goods sold by a company.
Average Inventory
(Beginning Inv + Ending Inv) / 2.
Understanding your results
The Turnover Ratio is how many times you flipped your stock. Days to Sell is the average time an item sits before selling. Lower days = Better efficiency.
Example scenarios
Grocery Store
High turnover (e.g. 15). Goods are perishable and sell fast.
Jewelry Store
Low turnover (e.g. 1.5). High value items sit longer.
Key Features
- Ratio Calculation
- Days Sales (DSI)
- Average Inventory Logic
Tips & Best Practices
- Compare your ratio to industry averages. A turnover of 4 might be great for furniture but terrible for supermarkets.
- Improving turnover releases cash flow tied up in stock.
Glossary of Terms
- DSI
- Days Sales of Inventory. The average number of days it takes to turn inventory into sales.
- Obsolete Inventory
- Stock that cannot be sold because it has expired or gone out of fashion.