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Inventory turnover measures how many times a business sells through its inventory over a period — a key efficiency metric for retail, manufacturing, and distribution businesses. Slow turnover can mean tied-up cash and rising storage costs.
This calculator divides cost of goods sold by average inventory to get the turnover ratio, and also shows the average number of days it takes to sell through inventory.
How it works
Enter annual cost of goods sold and average inventory value for the period. The tool divides COGS by average inventory to get the turnover ratio, then divides 365 by that ratio to estimate average days to sell.
- Enter cost of goods sold (annual).
- Enter average inventory value.
- Click Calculate to see your results.
Examples
A healthy turnover rate
$600,000 in COGS against $100,000 in average inventory gives a turnover ratio of 6 — inventory sells through about every 61 days.
Who should use it
- Assessing how efficiently a business manages inventory relative to sales.
- Identifying slow-moving inventory tying up cash.
Industry applications
- Retail and e-commerce
- Manufacturing and distribution
Advantages
- Simple efficiency metric from two figures most businesses already track.
- Converts the ratio into an intuitive "days to sell" figure alongside the raw number.
Limitations
- Normal ranges vary enormously by industry, so the raw number needs context.
- A single blended ratio can hide big differences between fast- and slow-moving product lines.
Common mistakes to avoid
- Using a single point-in-time inventory figure instead of an average, which can skew the ratio if inventory fluctuates seasonally.
- Comparing turnover ratios across very different industries without adjusting for normal sector ranges.
Best practices
- Use an average inventory figure (beginning plus ending, divided by two) rather than a single snapshot for a more accurate ratio.
Tips
- Calculate turnover separately by product category when possible — a healthy blended ratio can hide specific slow-moving items quietly tying up cash.