Inventory Turnover Ratio Calculator
See how many times you sell through and replace your stock in a year, and how many days it sits on the shelf.
This calculator runs entirely in your browser. Your numbers are never uploaded anywhere.
How to use this tool
This inventory turnover ratio calculator tells you how often you sell and replace your stock during a period. Start by entering your cost of goods sold (COGS) for the period you care about, usually a full year. Next, choose how you want to provide inventory: enter a single average inventory value, or enter your beginning and ending inventory so the tool averages them for you. Set the days in the period (365 for a year, 90 for a quarter), then press Calculate. You will get the turnover ratio and the days inventory on hand, which is how long an item sits before it sells.
The formula and how it works
Average inventory = (Beginning inventory + Ending inventory) / 2
Days inventory on hand = Days in period / Inventory turnover
Turnover measures stock replacement frequency: a ratio of 6 means you cleared and refilled your entire inventory six times during the period. Using cost of goods sold instead of revenue keeps both sides of the ratio at cost, so it is one of the cleaner cost of goods sold metrics for judging warehouse rotation speed. A higher ratio usually means lean, fast-moving stock and less cash tied up on the shelf, while a very low ratio can signal overstocking or slow sellers. The days figure flips the ratio into plain language: how many days, on average, a unit waits before it is sold.
A real example
Suppose a retail store reports cost of goods sold of $480,000 for the year. Its inventory started the year at $90,000 and ended at $70,000, so the average inventory is (90,000 + 70,000) / 2 = $80,000. The turnover ratio is 480,000 / 80,000 = 6.0, meaning the store sold through its stock six times in the year. Days inventory on hand is 365 / 6 = about 60.8 days, so a typical item sits roughly two months before it sells. If a competitor turned over 12 times, its stock would clear in about 30 days, freeing up cash twice as fast.
Common questions
What is a good inventory turnover ratio?
It depends heavily on the industry. Grocery and fresh food often turn 12 or more times a year, while furniture or heavy machinery may turn only 3 to 5 times. Compare your ratio to similar businesses rather than to a single universal target.
Should I use COGS or sales revenue?
Use cost of goods sold. Inventory is recorded at cost, so dividing COGS by average inventory keeps both numbers on the same basis. Using sales revenue inflates the ratio because revenue includes your markup.
Why use average inventory instead of a single balance?
Inventory levels swing over a period because of buying cycles and seasonality. Averaging the beginning and ending balances smooths out those swings so the ratio reflects the whole period, not one snapshot.
What does days inventory on hand tell me?
It converts the turnover ratio into the average number of days a unit stays in stock before it sells. Fewer days generally means faster warehouse rotation speed and less cash locked up in unsold goods.
Is this calculator financial advice?
No. It is an educational estimate to help you understand stock replacement frequency. For decisions about financing, accounting, or tax, talk to a qualified professional who knows your full situation.