Inventory Turnover
Inventory turnover shows how many times a business sells and replaces its stock in a period.
Higher turnover usually means efficient buying and less cash tied up in stock. Very high turnover can also signal frequent stockouts.
Days of inventory, the average number of days stock is held, is another way to express the same idea.
Formula
Example
With 180,000 in COGS and 45,000 average inventory, turnover is 4 times a year, or about 91 days of inventory.
Try the tool
Inventory Turnover
COGS ÷ inventory → turnover.
Turnover ratio and days of inventory.
Open toolReorder Point
Sales + lead time → reorder.
Reorder point and safety stock.
Open toolGMROI Calculator
Margin ÷ inventory → return.
Gross margin return on inventory investment.
Open toolSell-Through Rate
Sold ÷ received → %.
Share of stock sold and days to sell out.
Open toolWeeks of Supply
Stock ÷ weekly sales → weeks.
How long stock lasts and how much to order.
Open toolCommon questions
What is a good inventory turnover?
It depends on the industry; compare with your own history.
Should I use COGS or sales?
COGS gives a more accurate ratio.