Inventory Turnover Calculator
Calculate the inventory turnover ratio and days inventory outstanding from cost of goods sold and average inventory.
Last reviewed by the Radiatus Cloud team
Calculate how many times inventory is sold and replaced, and days to sell through.
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Calculate inventory turnover
The inventory turnover ratio shows how many times a business sells and replaces its stock over a period, usually a year. It is calculated by dividing the cost of goods sold by the average inventory value. A turnover of six means the company cycles through its entire inventory six times a year. Dividing the number of days in the year by the turnover gives days inventory outstanding, the average number of days stock sits before being sold, which is often easier to interpret.
Using the cost of goods sold rather than sales revenue keeps both figures on a cost basis for an accurate ratio.
What turnover reveals
Inventory turnover is a key efficiency metric for retailers, wholesalers and manufacturers. A high turnover means stock sells quickly, tying up less cash and reducing the risk of obsolescence, while a low turnover can signal weak sales, overstocking or outdated products. The right level depends heavily on the industry: a grocery store turns over perishable stock far faster than a furniture retailer.
Watch for a turnover that is too high, which can mean stock shortages and lost sales from running out. Comparing against industry benchmarks and your own trend over time gives the most insight. All calculation happens locally in your browser.
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Frequently Asked Questions
What is the inventory turnover formula?
It is the cost of goods sold divided by the average inventory value over the same period, giving the number of times inventory is sold and replaced.
What are days inventory outstanding?
It is the average number of days stock is held before being sold, found by dividing 365 by the turnover ratio.
Why use cost of goods sold, not sales?
Inventory is recorded at cost, so using cost of goods sold keeps both parts of the ratio on the same basis for an accurate figure.
Is a higher turnover always better?
Usually it signals efficient selling, but a turnover that is too high can mean frequent stockouts and lost sales from running out of inventory.
How do I find average inventory?
A common method is to average the beginning and ending inventory for the period, which smooths out seasonal swings.
Privacy & Security
Everything runs in your browser; nothing is uploaded.
How to Use
Enter cost of goods sold and average inventory value.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
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