Inventory Turnover Calculator
Find how many times you sell through your stock, how many days it sits, and how many weeks of supply you hold. Use cost of goods sold or sales, enter average inventory directly or from beginning and ending balances, set your own period length, add a carrying-cost estimate, or reverse-solve the inventory a target turnover needs.
Formula
Worked example
COGS of $600,000 with beginning inventory $90,000 and ending $110,000 gives average inventory $100,000. Turnover is 600,000 ÷ 100,000 = 6.0 times per year, or 365 ÷ 6 ≈ 60.8 days (8.7 weeks) of stock. At a 25% carrying-cost rate, holding $100,000 of stock costs about $25,000 a year.
What inventory turnover measures
Inventory turnover counts how many times a business sells and replaces its stock over a period, usually a year. You divide the cost of goods sold by the average inventory held during that period. A turnover of 6 means the company cycled through the cost-equivalent of its average stock six times. A higher ratio generally signals strong sales and lean inventory, while a low ratio can point to overstocking, weak demand, or obsolete goods sitting on the shelf. Dividing the days in the period by the turnover gives days inventory outstanding, and dividing that by seven gives weeks of supply, the same idea expressed in the units planners often use.
COGS or sales, and how to find average inventory
Both the numerator and denominator should be stated at cost so the comparison is consistent. Cost of goods sold reflects what the sold inventory actually cost, not its selling price, which keeps margin out of the ratio. If you only have a revenue figure, switch the flow figure to sales and enter your gross margin: the calculator multiplies sales by one minus the margin to recover an approximate cost basis. For average inventory you can type the period average directly, or enter beginning and ending balances and let the tool average them. Businesses with strong seasonality get a more accurate denominator by averaging monthly or quarterly balances instead of just two snapshots.
Custom periods, carrying cost and reverse planning
The period length is yours to set: keep 365 for a full year, switch to 90 or 91 for a quarter, or 30 for a month, and some firms use a 360-day convention. Turn on the carrying-cost estimate to multiply your average inventory by an annual holding rate, commonly 20 to 30 percent once you account for capital, storage, insurance, shrinkage and obsolescence, which shows the real cash cost of sitting stock. The reverse mode flips the question: tell it a target turnover and it solves for the average inventory that target allows at your current cost of goods sold, which is useful when you are budgeting a stock level or negotiating a reorder cadence.
Reading the result in context
There is no universal good turnover number, it depends heavily on the industry and business model. Supermarkets and fresh-food retailers turn inventory many times a year because products spoil and margins are thin, whereas car dealers, furniture stores, and luxury goods turn far more slowly. The most useful comparison is against your own history and direct competitors. A falling ratio may warn of building dead stock, while a sharply rising ratio could mean you are running too lean and risking stockouts that cost you sales.
Typical inventory turnover by industry
| Industry | Typical turnover (per year) | Pace |
|---|---|---|
| Grocery & fresh food | 12-20 | Very fast |
| Apparel & fashion retail | 4-8 | Fast |
| Consumer electronics | 5-9 | Fast |
| Restaurants (food stock) | 20-40 | Very fast |
| Furniture & home goods | 3-6 | Healthy |
| Automotive dealers | 2-4 | Below average |
| Jewelry & luxury goods | 1-2 | Slow |
Approximate annual ranges, use as a rough benchmark, not a target.
Frequently asked questions
What is a good inventory turnover ratio?
It depends entirely on the industry. A turnover between roughly 4 and 8 is healthy for many retailers, but grocers may turn 15+ times a year while furniture or jewelry sellers turn only once or twice. Compare against your own past results and direct competitors rather than a single benchmark.
Should I use sales revenue or cost of goods sold?
Use cost of goods sold. Average inventory is valued at cost, so the numerator must also be at cost to be consistent. If you only have a revenue figure, switch the flow figure to sales and enter your gross margin, and the calculator converts revenue to an approximate cost basis before computing the ratio.
How do I calculate average inventory?
The standard method adds the beginning inventory and ending inventory for the period and divides by two, all valued at cost. This calculator does that for you if you choose the beginning-and-ending option. For businesses with strong seasonality, averaging monthly or quarterly balances gives a more accurate figure than just two snapshots.
How do I reverse-solve for a target turnover?
Switch the mode to reverse, enter your cost of goods sold and the turnover you want to hit, and the calculator divides the two to show the average inventory level that target allows. It also reports the matching days inventory outstanding and weeks of supply so you can sanity-check the stock plan.
What is inventory carrying cost?
Carrying cost is what it costs to hold stock for a year: the capital tied up, plus storage, insurance, shrinkage and obsolescence. It commonly runs 20 to 30 percent of the inventory value per year. Turn on the estimate to multiply your average inventory by a rate you choose and see the annual cost of slow-moving stock.