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Inventory Turnover Calculator

Find your inventory turnover ratio.

How it is calculated

The tool divides the cost of goods sold over a period by the value of inventory: turnover = COGS ÷ inventory, shown with two decimals. It then converts this to a time: days on hand = 365 ÷ turnover, rounded to whole days. Both figures should cover the same year and use the same currency. COGS is what the goods you sold cost you, not sales revenue. Inventory should be the average stock value for the period, for example (opening + closing) ÷ 2, because the tool uses the single number you type. Inventory must be above zero and COGS cannot be negative, otherwise there is no result. If COGS is zero, turnover is 0.00 and the days figure is a dash, since nothing was sold. The 365 is fixed, so for a shorter period scale COGS to a full year first.

Worked example

A shop had a cost of goods sold of 480,000 for the year and an average inventory of 80,000. Turnover: 480,000 ÷ 80,000 = 6.00, so the stock was sold and replaced six times. Days on hand: 365 ÷ 6 = 60.83, shown as 61 days. The average item sat on the shelf for about two months. If inventory were halved to 40,000 with the same COGS, turnover would double to 12.00 and days on hand fall to 30.

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Common mistakes

  • Using sales revenue instead of cost of goods sold. Revenue includes your margin, so turnover looks better than it is.
  • Entering year-end stock instead of average stock. A seasonal business can show a very different ratio depending on the date.
  • Putting a quarterly COGS against the fixed 365-day conversion. Annualise the COGS first or the days figure comes out far too long.
  • Entering inventory at selling price while COGS is at cost. Both must be valued the same way.
  • Comparing turnover across industries. A grocer and a furniture shop have very different normal ratios, so compare with similar businesses.

Sources

About this calculator

This calculator finds inventory turnover — cost of goods sold (COGS) divided by average inventory — and converts it into days on hand (365 / turnover), showing how many times stock is sold and replaced in a year. A higher ratio means inventory moves fast; a low ratio can signal overstocking or slow-moving goods.

Retail buyers, warehouse managers, and small business owners use it to benchmark against industry norms, spot dead stock before it ties up cash, and plan reorder timing. Accountants and analysts also use it when reviewing a company's working-capital efficiency.

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Comments (1)

  • Editorial team

    Days on hand are always computed from 365, whatever period the cost of goods sold covers. Entering a quarter's figures of 120,000 against an inventory of 80,000 gives a turnover of 1.50 and 243 days, which overstates the shelf time, since that quarter spans only about 91 days. Use a full year of cost of goods sold, and an average inventory rather than a year-end count. Do you count stock monthly or only at year end?

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