Inventory Turnover Calculator
See how many times you sell through your stock, and how many days inventory sits before it sells.
- Days of inventory (DIO)
- 91.25
- Average inventory
- $45,000.00
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How to use the inventory turnover calculator
- Enter cost of goods sold for the period from your accounts, such as a year or a quarter.
- Enter the value of your inventory at cost at the start and end of that period.
- Set the number of days in the period, for example 365 for a year or 90 for a quarter.
Inventory turnover formulas
Use inventory valued at cost, not retail price, so it matches cost of goods sold.
Example
A store had 180,000 in cost of goods sold last year, with 40,000 of stock at the start and 50,000 at the end. Average inventory is 45,000, so turnover is 4×. Stock sits for about 91.25 days on average before it sells.
What is a good inventory turnover?
It depends on the category. Fast-moving goods like food can turn over dozens of times a year, while furniture or luxury goods may turn only two or three times. Compare against your own history and similar businesses.
How to improve turnover
Order smaller quantities more often, clear slow-moving stock with bundles or discounts, cut the number of low-selling variants, and use reorder points so you buy based on real demand.
Frequently asked questions
How do I calculate inventory turnover?
Divide cost of goods sold by average inventory for the same period.
What is days inventory outstanding?
The average number of days stock is held before it sells: days in the period divided by turnover.
Is higher turnover always better?
Usually, but too high can mean frequent stockouts and lost sales.
Can I use sales instead of COGS?
Some people do, but COGS gives a more accurate ratio because inventory is valued at cost.
How often should I measure it?
Quarterly or yearly for the business, and monthly for key products.
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