Inventory Turnover Calculator
Calculate how efficiently you're selling and replacing your inventory stock
Total cost of inventory sold during the period
(Beginning Inventory + Ending Inventory) ÷ 2
Inventory turnover is a financial ratio that measures how many times a company has sold and replaced its inventory during a specific period. A higher turnover ratio generally indicates strong sales and efficient inventory management, while a lower ratio may suggest weak sales or excess inventory.
Inventory Turnover = Cost of Goods Sold ÷ Average Inventory Value
Why It Matters:
- •Indicates how efficiently you manage inventory
- •Higher ratio means faster sales and less capital tied up
- •Lower ratio may indicate overstocking or slow sales
- •Industry benchmarks vary significantly
With our inventory management platform, you can:
- ✓Track inventory turnover in real-time
- ✓Identify slow-moving products automatically
- ✓Get alerts when stock levels are too high or low
- ✓Optimize reorder points based on historical data
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What next?
See turnover per product and per period without rebuilding a pivot table, alongside stock value and dormant-stock reports.
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See also
Updated on 9 October 2026
How to use the inventory turnover calculator
Inventory turnover counts how many times you sold and replaced your stock over a period. It shows how long money stays tied up on the shelf.
- Take the cost of goods sold for the period from your income statement. Use the cost, not the sales figure.
- Calculate the average inventory value: opening inventory plus closing inventory, divided by two.
- Enter both figures and click calculate.
- Divide the number of days in the period by the result to get the number of days an item stays in stock on average.
Worked example
Cost of goods sold for the year: 1,200,000. Opening inventory: 180,000. Closing inventory: 220,000.
Average inventory = (180,000 + 220,000) ÷ 2 = 200,000. Turnover = 1,200,000 ÷ 200,000 = 6.
Days in stock = 365 ÷ 6 ≈ 61 days. On average, a product waits two months before it is sold.
How to read the result
| Result | What it usually means |
|---|---|
| Rising over time | Stock is selling faster, or you are holding less of it. |
| Falling over time | Sales are slowing or stock is building up. Look for slow-moving items. |
| Very high for your sector | Efficient, but check that you are not running out of stock and losing sales. |
| Very low for your sector | Cash is tied up. Review order quantities and ageing products. |
Common mistakes
- Using sales instead of cost of goods sold. Sales include your margin and inflate the ratio.
- Using only the closing inventory in a seasonal business. Average the month-end values instead.
- Comparing a quarter with a full year without converting them to the same period.
- Looking only at the company-wide figure. One fast product can hide a warehouse of slow ones.
Frequently asked questions
What is a good inventory turnover ratio?
It depends on the sector: fresh food turns over many times faster than furniture or spare parts. The useful comparisons are your own previous periods and businesses selling the same kind of product.
What is the difference between inventory turnover and days of inventory?
They are the same information in two forms. Turnover is a number of cycles per period; days of inventory is the period divided by the turnover.
Can inventory turnover be too high?
Yes. A very high ratio can mean stock levels are too thin, with frequent stockouts and rush orders that cost more than the storage saved.
Should I calculate turnover per product?
Yes, when you can. Turnover by product or by category shows which items earn their shelf space and which ones should be reduced or discontinued.