Inventory turnover calculator: how fast does your stock sell?
This inventory turnover calculator shows how many times you sold and replaced your stock in a period, how many days of inventory you are holding and how much stock you carry per rupee, dollar or pound of sales. Enter the cost of goods sold, the beginning and ending inventory and the length of the period, and it gives the turnover, the days of stock, the stock cover in weeks and the stock-to-sales ratio.
It works for a year, a quarter, a month or any number of days, and annualises shorter periods so you can compare them with yearly figures. If you only have sales, switch the basis to net sales. Use it with the COGS calculator to get the cost figure first.
How to use the Inventory Turnover Calculator
- Choose whether to measure against cost of goods sold (the usual way) or net sales.
- Pick the period, or enter your own number of days.
- Enter the cost of goods sold, the beginning inventory and the ending inventory, all at cost.
- Optionally add net sales to see the stock-to-sales ratio.
- Read the turns, days of inventory and weeks of cover, and copy the summary.
Inventory Turnover Calculator features
Turns and days
Turnover and days of inventory in one view, for any period from one day to ten years.
Annualised turns
Quarterly or monthly figures are converted to a 365-day basis for comparison.
Stock-to-sales ratio
Average inventory divided by net sales, with weeks of stock cover.
COGS or sales basis
The standard cost-based measure, or a sales-based one when that is what a benchmark uses.
Formulas and a worked example
Inventory turnover = cost of goods sold ÷ average inventory, where average inventory = (beginning inventory + ending inventory) ÷ 2. A business with $480,000 of COGS, $90,000 of stock at the start of the year and $110,000 at the end has an average inventory of $100,000 and turnover of 480,000 ÷ 100,000 = 4.8 turns.
Days of inventory = days in the period ÷ turnover = 365 ÷ 4.8 = 76 days: on average stock waits about 76 days before it is sold. The stock-to-sales ratio is average inventory ÷ net sales, here 100,000 ÷ 720,000 = 0.139, which is also about 10.9 weeks of stock.
| Measure | Formula | Example |
|---|---|---|
| Average inventory | (beginning + ending) ÷ 2 | $100,000 |
| Inventory turnover | COGS ÷ average inventory | 4.8 turns |
| Days of inventory | days ÷ turnover | 76 days |
| Stock-to-sales ratio | average inventory ÷ net sales | 0.139 |
How to read the result
- Compare with your own past periods and with similar businesses: a grocer and a jeweller have very different healthy turns.
- High turnover frees cash, but if it comes with empty shelves you are losing sales; the reorder point calculator and EOQ calculator help set order levels.
- Low turnover can mean slow-moving or obsolete stock, over-ordering or a seasonal build-up. Look at the stock list line by line in the stock register.
- Two data points can hide swings: if stock was much higher mid-year, average several monthly counts and use that as the “average inventory”.
Inventory Turnover Calculator FAQ
How do you calculate inventory turnover?
Divide the cost of goods sold for the period by average inventory, which is beginning plus ending inventory divided by two.
How do I calculate inventory turnover in days?
Divide the number of days in the period by the turnover. A turnover of 4.8 over 365 days is 76 days of inventory.
What is a good inventory turnover?
It depends on the industry and the business model, so compare with your own history and similar firms. This tool shows no industry benchmarks.
Should I use sales or cost of goods sold?
Use cost of goods sold, because inventory is valued at cost. A sales-based figure is shown only for comparison with benchmarks defined that way.
What is the stock-to-sales ratio?
Average inventory divided by net sales for the same period. It shows how much stock you hold for each unit of sales.
Why annualise a quarterly figure?
Turns over a quarter are about a quarter of the yearly figure. Annualising multiplies by 365 divided by the days in the period so periods can be compared.
Is this accounting advice?
No. It applies standard formulas to the numbers you enter.