Inventory Turnover Calculator
Enter cost of goods sold and your beginning and ending inventory to get the inventory turnover ratio, days inventory outstanding and how your stock compares with typical ranges. Runs privately in your browser.
COGS and inventory must cover the same period and both be valued at cost. Average inventory = (beginning + ending) ÷ 2.
Industry context
Target turnover
How to use the Inventory Turnover Calculator
- Choose the method: COGS (standard) or Sales if you need to match figures calculated that way.
- Enter COGS for the period from your income statement, plus net sales if you want margin and GMROI.
- Enter inventory at the start and end of the same period, or tick the box to type the average directly.
- Pick the period length (year, quarter, month or custom days) and press Calculate turnover.
- Compare and plan: choose your industry for context and set a target turnover to see how much cash it would free.
Inventory turnover formulas
- Average inventory = (beginning inventory + ending inventory) ÷ 2. If you have monthly counts, averaging all 13 month-end figures gives a more accurate number for seasonal businesses.
- Inventory turnover = COGS ÷ average inventory.
- Days inventory outstanding (DIO) = days in period ÷ turnover = average inventory ÷ COGS × days.
- Annualized turnover = period turnover × 365 ÷ days in period.
- GMROI = (net sales − COGS) ÷ average inventory at cost.
Worked example: a shop has COGS of $600,000 for the year, $90,000 of stock on 1 January and $110,000 on 31 December. Average inventory is $100,000, so turnover is 600,000 ÷ 100,000 = 6.0 and DIO is 365 ÷ 6 = 60.8 days. With net sales of $1,000,000 the gross margin is $400,000 and GMROI is 4.0. Raising turnover to 8 would mean holding about $75,000 on average, freeing $25,000 of cash.
Turnover and days of inventory at a glance
| Turnover per year | Days of inventory (365-day year) | Weeks of stock |
|---|---|---|
| 1× | 365 days | 52.1 |
| 2× | 182.5 days | 26.1 |
| 4× | 91.3 days | 13.0 |
| 6× | 60.8 days | 8.7 |
| 8× | 45.6 days | 6.5 |
| 12× | 30.4 days | 4.3 |
| 24× | 15.2 days | 2.2 |
| 52× | 7.0 days | 1.0 |
How to improve inventory turnover
- Order closer to demand. Smaller, more frequent orders lower average stock; the EOQ calculator finds the order size that balances ordering and holding costs.
- Clear slow movers. Run an ABC or ageing analysis and discount or bundle items that have not sold in 90+ days.
- Improve forecasting with sales history and seasonality instead of ordering by habit.
- Shorten lead times with closer or more reliable suppliers so you need less safety stock.
- Watch margins too. Deep discounts raise turnover but cut profit; check the effect with the profit margin calculator.
Industry ranges shown in the tool are rough rules of thumb to give context, not published benchmarks. For a precise comparison, calculate the same ratio from the annual reports of companies in your sector.
Frequently asked questions
What is the inventory turnover formula?
Inventory turnover = cost of goods sold ÷ average inventory, where average inventory = (beginning inventory + ending inventory) ÷ 2. For example, COGS of $600,000 and average inventory of $100,000 give a turnover of 6 times a year.
How do I calculate days inventory outstanding (DIO)?
DIO = days in the period ÷ inventory turnover, which is the same as average inventory ÷ COGS × days. A turnover of 6 over a 365-day year means stock sits for about 60.8 days on average before it is sold.
What is a good inventory turnover ratio?
It depends on the industry. Grocery stores turn stock very quickly, often more than 10 times a year, while jewelry stores may turn it only once or twice. A higher ratio usually means efficient stock management, but too high can mean stock-outs. Compare with peers in your sector and with your own history.
Should I use COGS or sales to calculate inventory turnover?
COGS is the standard because both COGS and inventory are valued at cost. Using sales mixes a selling-price figure with a cost figure, which inflates the ratio by your markup. Use the sales method only to compare with numbers that were calculated the same way.
How do I calculate turnover for a quarter or a month?
Use the COGS and the beginning and ending inventory for that quarter or month, and pick the matching period. The tool shows the turnover for the period, DIO in days and an annualized turnover so you can compare with yearly benchmarks.
What is GMROI?
Gross margin return on inventory investment is gross margin ÷ average inventory at cost. A GMROI of 4 means each dollar invested in inventory returned four dollars of gross margin during the period. Retailers use it alongside turnover to judge whether stock earns its keep.