Inventory Turnover Calculator
Measure how efficiently you sell and replace inventory. Compare your turnover ratio against industry benchmarks, run ABC analysis, and model carrying cost savings.
Your Inputs
Enter your annual cost of goods sold and average inventory value.
(Beginning Inventory + Ending Inventory) / 2
Results
Enter your inputs and click Calculate to see results.
Results will appear here after you calculate.
What is Inventory Turnover?
Inventory turnover is a financial ratio that measures how many times a company sells and replaces its entire inventory during a given period, typically one year. A higher turnover ratio indicates efficient inventory management and strong sales, while a low ratio may signal overstocking or sluggish demand.
The Inventory Turnover Formula
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. COGS is used rather than revenue because it excludes markup, giving a more accurate picture of how efficiently you move products. Average inventory is calculated as (Beginning Inventory + Ending Inventory) / 2.
Days of Inventory on Hand
Days of inventory (also called days inventory outstanding or DIO) converts the turnover ratio into the average number of days it takes to sell your entire stock. The formula is 365 / Turnover Ratio. For example, a turnover of 8x means you sell through inventory roughly every 45 days.
ABC Analysis Explained
ABC analysis classifies inventory by revenue contribution. A items typically represent ~20% of SKUs but drive ~80% of revenue — these need tight stock control and frequent reordering. B items are mid-tier contributors (~15% of revenue), and C items are the long tail (~5% of revenue) that often tie up disproportionate capital relative to their sales impact.
Why Carrying Cost Matters
High turnover means your capital is not tied up in unsold goods. It reduces carrying costs — storage, insurance, depreciation, and obsolescence risk. Low turnover can indicate dead stock that drains working capital and warehouse space. However, turnover that is too high may mean you're understocking and losing sales to stockouts.
How Nventory Helps
Nventory tracks your COGS and inventory values in real time across every warehouse and sales channel. Built-in analytics automatically calculate your turnover ratio, flag slow-moving SKUs, and surface opportunities to optimize purchasing — so you always know where your capital is working hardest and where it is stuck.
Want real-time turnover tracking and dead stock alerts?
Frequently Asked Questions
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