Updated: September 30, 2026
Inventory Turnover Calculator
Calculate inventory turnover, average inventory, and approximate days of inventory using cost of goods sold and beginning and ending inventory values.
Inventory Turnover Formula
Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
Example
Suppose a business has:
- Cost of goods sold: $120,000
- Beginning inventory: $20,000
- Ending inventory: $30,000
Average inventory:
Inventory turnover:
Approximate days of inventory:
What Does Inventory Turnover Mean?
Inventory turnover estimates how many times a business sells and replaces its average inventory during a period.
A higher ratio can indicate inventory moves more frequently, while a lower ratio can indicate products remain in stock longer.
The appropriate turnover rate varies significantly by industry, product type, margins, seasonality, lead times, and business model.
Why Inventory Turnover Matters
- It can highlight slow-moving inventory
- It can help evaluate purchasing decisions
- It can identify excess capital tied up in stock
- It can support inventory planning
- It can help compare performance over time
Related Inventory Resources
- Best Inventory Management Software for Small Businesses
- Inventory Management Software Cost Guide
- How to Choose Inventory Management Software
Frequently Asked Questions
Is higher inventory turnover always better?
No. Very high turnover can sometimes indicate insufficient stock and lost sales, while very low turnover can indicate overstocking. Context matters.
Should I use sales or cost of goods sold?
Inventory turnover is commonly calculated using cost of goods sold because inventory is generally recorded at cost rather than selling price.
Can I calculate turnover monthly?
Yes, but make sure the COGS and inventory values cover the same reporting period and interpret the result consistently.