Inventory Turnover Calculator

Understanding inventory turnover

Inventory turnover is a core efficiency metric that shows how many times inventory is sold or consumed during a period. In distribution and manufacturing, it is often used to compare the velocity of different SKUs, suppliers, or facilities. A higher turnover usually means inventory is moving quickly, which can reduce carrying costs and obsolescence risk. A lower turnover can signal slow-moving stock, excess inventory, or demand issues that require attention.

The turnover ratio uses cost of goods sold rather than revenue. That choice avoids the distortion caused by pricing and margin differences across products. It keeps the focus on the cost basis of inventory, which is the amount of capital tied up in stock. Average inventory is typically the average of beginning and ending inventory for the period, though many teams use a rolling average to smooth out volatility. If you have strong seasonality, consider calculating turnover by quarter and comparing results across equivalent periods year to year.

Days per turn translates turnover into a time-based view. It answers the practical question: how long does inventory sit before it is used or sold? This makes it easier to align turnover targets with lead times, shelf life, and supplier terms. For example, if days per turn is 60 and lead time is 45, you have limited time for error in replenishment planning. If days per turn is 15 and lead time is 30, you may be running too lean for stable service.

Inventory turnover is not a standalone score. High turnover may be great for low-variability items but risky for items with demand spikes. Use it alongside service level and stockout metrics to avoid cost-cutting that hurts customers. This calculator provides a fast way to model the ratio and support discussions across procurement, planning, and warehouse operations without sharing sensitive cost data.

Formula

Inventory turnover: COGS / Average Inventory

Days per turn: Period days / Turnover

Example calculation

If COGS is $480,000 and average inventory is $80,000 over a 365-day period, turnover is 480,000 / 80,000 = 6.0 turns per year. Days per turn is 365 / 6.0 = 60.8 days. That means inventory is cycling about every two months.

FAQs

What is inventory turnover?

Inventory turnover measures how many times inventory is sold or used during a period.

Why use COGS instead of sales?

COGS aligns with inventory valuation and avoids markup distortion in the turnover ratio.

Is a higher turnover always better?

Not always. Very high turnover can indicate understocking or service risk.

Is this calculator private?

Yes. All calculations run locally in your browser.

How it works

This calculator divides COGS by average inventory to get turnover, then converts the ratio into days per turn. All computation is client-side for privacy.

Disclaimer

Inventory turnover is a directional metric. Compare results across similar periods and account for seasonality and promotions.