Inventory Turnover Calculator
Evaluate how efficiently physical stock is sold and replenished over a period. Measuring stock turns helps identify obsolete inventory and optimize working capital.
How it works
Inventory turnover ratio = cost of goods sold (COGS) ÷ average inventory. Days sales of inventory (DSI) = 365 ÷ turnover ratio. With annual COGS of 240,000 and average stock of 40,000, stock turns 6 times per year, taking approximately 60.83 days to sell through.
Questions
What does an inventory turnover ratio of 6 mean?
It means your business sold and replaced its average inventory holding six times during the measured annual timeframe.
How do I determine average inventory value?
Add beginning inventory and ending inventory for the period and divide by two: (beginning inventory + ending inventory) ÷ 2.
Why is higher inventory turnover usually beneficial?
Higher turns indicate rapid sales velocity, reducing warehouse holding expenses, inventory obsolescence risks, and tied-up working capital.
Results are estimates for planning. They are not tax, legal or financial advice.
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