Divide cost of goods sold by average inventory to see how many times stock is sold and replaced.
The ratio divides one figure by the other and is read against a conventional benchmark of 6. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number. A turnover ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.
Inventory Turnover
Inventory Turnover = Cost of goods sold ÷ Average inventory held
Inventory Turnover = Cost of goods sold ÷ Average inventory held The ratio divides one figure by the other and is read against a conventional benchmark of 6. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number.
A turnover ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.
This calculator takes 2 inputs: Cost of goods sold, Average inventory held. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.