Inventory Turnover
Measure how fast inventory sells through in a year.
About Inventory Turnover
Inventory turnover compares what a business sells at cost to the stock it averages, and the complement gives how many days goods sit before selling. Cash locked in shelves earns nothing, so healthy turnover separates retailers whose money cycles from those whose stock gathers dust.
Formula
Inventory Turnover
Turnover = cost of goods sold / average inventory
- average inventory
- Typical value of stock held across the year
Worked example
With the default values below, Inventory Turnover returns Inventory Turnover of 5.00. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Annual cost of goods soldminimum 0
- 250,000
- Average inventory valueminimum 0
- 50,000
Results
- Inventory Turnover
- 5.00
- Days in Inventory
- 73.0
Step by step
- 1Values used
- 2Inventory Turnover
- 3Inventory Turnover= 5.00
- 4Days in Inventory= 73.0
Assumptions and limits
- The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Inventory Turnover calculated?
Turnover = cost of goods sold / average inventory Inventory turnover compares what a business sells at cost to the stock it averages, and the complement gives how many days goods sit before selling.
Why does Inventory Turnover matter?
Cash locked in shelves earns nothing, so healthy turnover separates retailers whose money cycles from those whose stock gathers dust.
What values do I need to enter?
This calculator takes 2 inputs: Annual cost of goods sold, Average inventory value. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.