Inventory Turnover Calculator
Calculate inventory turnover from cost of goods sold and average inventory, and see days inventory outstanding. Formula and worked example included.
Inventory turnover shows how many times you sold and replaced your average stock over a period. Higher turnover usually means leaner working capital, as long as service levels hold.
How it works
Divide cost of goods sold by average inventory value, both measured at cost. Divide the period length by turnover to get days inventory outstanding.
The formula
Inventory turnover = cost of goods sold / average inventory value. Using COGS (not revenue) keeps both sides valued at cost for a like-for-like ratio.
Worked example
With COGS of 150,000,000 and average inventory of 30,000,000, turnover = 150M / 30M = 5 turns. That is about 365 / 5 = 73 days of inventory outstanding.
Frequently asked questions
Should I use sales or COGS?
Use COGS. Dividing sales by inventory mixes cost and retail values and overstates turnover.
What is a good turnover ratio?
It varies by industry. Compare against your own trend and peers rather than a universal target.
How does this relate to days of cover?
Days inventory outstanding = period days / turnover. Days of cover looks forward from current stock and demand; turnover looks back over a period.