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Inventory Turnover Calculator

See how many times a year your stock sells through, how many days it sits, and how that compares to your sector.

Your Numbers
$
Use COGS, not revenue — revenue includes your margin and inflates the ratio.
$
What your stock was worth at cost on day one
$
What it was worth at cost on the last day
Typical range 4–6x · retail averages
Your Result
Inventory Turnover
4.8x per year
How many times you sold and replaced your average stock in a year.
Days inventory outstanding
76days
Average inventory
$100,000
Inside the range for general retail (4–6x)
Turnover is typical for this sector. Segment by product class to find pockets that lag.
Turns = COGS ÷ Avg Inv
        = 480,000 ÷ 100,000
        = 4.8x
DIO   = 365 ÷ 4.8 = 76 days

Benchmarks are directional, not targets. See the full table and sources

How it works

Inventory turnover is how many times you sold and replaced your average stock over a year. It is the clearest single read on whether your inventory is working or just sitting there. Low turnover means cash is parked on shelves; high turnover means it is recycling into new sales.

Cost of goods sold ÷ average inventory gives the ratio. Average inventory is the value at the start of the period plus the value at the end, divided by two — both at cost, not retail.

Days inventory outstanding is the same fact stated in days: 365 ÷ turnover. A turnover of 5 means a unit sits about 73 days before it sells. Most people find the days figure easier to act on, because it maps directly onto how long your cash is tied up.

Worked example — a retail store

  • Cost of goods sold (year):$480,000
  • Inventory at start of year:$95,000
  • Inventory at end of year:$105,000
  • Average inventory:$100,000
  • Turnover (480,000 ÷ 100,000):4.8x
  • Days inventory (365 ÷ 4.8):76 days

The mistake almost everyone makes

Using revenue instead of COGS in the numerator. Revenue includes your gross margin, so it inflates the ratio by exactly your markup — a store running 50% margin will report double its real turnover. The two numbers are not comparable, and benchmark tables are all built on COGS.

The second mistake is trusting a company-wide number. One fast-moving product line will mask a warehouse full of dead stock. Calculate turnover per product class, and per location if you hold stock in more than one place.

Want this per product, not per spreadsheet?

InventoryQuick tracks cost and movement on every item, so turnover and days-on-hand are calculated per SKU and per location automatically — no year-end reconstruction. From $19/mo flat, no per-user fees.

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