Inventory Turnover Calculator
Enter your cost of goods sold (COGS) for the period and your average inventory value to calculate your inventory turnover ratio and the average number of days inventory sits before selling.
How the Inventory Turnover formula works
Inventory turnover and days in inventory:
Turnover ratio = COGS / Average inventory value Days in inventory = 365 / Turnover ratio
Step-by-step calculation
- Divide cost of goods sold for the period by the average inventory value held during that period.
- Divide 365 (days in a year) by the turnover ratio to find the average number of days inventory sits before it sells.
Worked example
Annual COGS of $600,000 with average inventory of $75,000: Turnover = 600,000 / 75,000 = 8. Days in inventory = 365 / 8 ≈ 45.6 days.
Frequently asked questions
What counts as a 'good' inventory turnover ratio?
It varies enormously by industry — grocery and perishable goods often turn over 15+ times a year, while furniture or heavy equipment may turn over just a few times a year. Compare against your specific industry's typical benchmarks rather than a universal number.
How do I calculate average inventory value?
A simple approach is averaging the beginning and ending inventory value for the period: (beginning + ending) / 2. More precise methods use multiple points throughout the period if that data is available.