Inventory Turnover Calculator
Calculate inventory turnover ratio and days of inventory on hand.
What is Inventory Turnover Calculator?
The inventory turnover calculator measures how often inventory is sold and replaced in a year.
Formula
Turnover = COGS / average inventory. Days on hand = 365 / turnover.
Worked example
$500k COGS, $50k avg inventory: turnover 10, days on hand 36.5. Inventory is replaced every ~5 weeks.
How to use this calculator
- Enter annual COGS and average inventory value.
- Turnover and days on hand appear.
Frequently asked questions
Industry-typical turnover?
Grocery: 15–20×/year. Apparel: 4–6×. Furniture: 4×. Auto dealers: 8–12×. Software: doesn't apply (no physical inventory).
Higher turnover = better?
Usually yes — capital is being efficiently used. But too high may indicate stockouts (lost sales). Match industry norms.
Why use COGS not revenue?
Inventory is at cost; COGS is also at cost. Using revenue would inflate the ratio because of markup.
How to improve turnover?
Better demand forecasting, just-in-time ordering, faster supplier shipping, removing slow-moving items. Or just lower inventory levels (with care to avoid stockouts).