Log in with GoogleAverage inventory
(Beginning + ending inventory) ÷ 2, at cost. Decision: whether two dates describe the stock of the period, or whether you need monthly values.
Free calculator
Inventory turnover calculator
Enter your cost of goods sold and the value of your stock at the start and end of a period. This calculator gives your inventory turnover and your days of inventory: how many times you sold your average stock, and how many days it took.
Your results
You sold your average stock 3.65 times in the year, so it took about 100 days to sell.
- Inventory turnover
- 3.65
- Cost of goods sold ÷ average inventory
- Days of inventory
- 100 days
- Days in period ÷ inventory turnover
- Average inventory (at cost)(Beginning + ending inventory) ÷ 2
- €40,000.00
- Days in period
- 365
Use values at cost for all three amounts and the same period for each. A shorter period gives a smaller turnover, so compare days of inventory across periods.
The start values are illustrative data.
How it works
Every step behind the numbers, worked through for the start values.
Illustrative data. An example shop sold products that cost €146,000.00 in a year. Its stock was worth €35,000.00 at cost on 1 January and €45,000.00 on 31 December.
| Step | Calculation | Result |
|---|---|---|
| Average inventory | (€35,000.00 + €45,000.00) ÷ 2 | €40,000.00 |
| Inventory turnover | €146,000.00 ÷ €40,000.00 | 3.65 |
| Days of inventory | 365 days ÷ 3.65 | 100 days |
The shop sold its average stock 3.65 times in the year, which is once every 100 days. Working it the other way round gives the same days: €40,000.00 ÷ €146,000.00 × 365.
What each number means
Four numbers, and the decision each one informs.
Inventory turnover
Cost of goods sold ÷ average inventory: how many times you sold through your average stock. Decision: how fast the money in stock comes back as sales.
Days of inventory
Days in the period ÷ inventory turnover: how long your average stock took to sell. Decision: whether your cash sits in stock longer than your suppliers and cash flow allow.
Period
Turnover grows with the length of the period you choose. A quarter gives about a quarter of the yearly figure, so compare equal periods or compare days of inventory.
Days of inventory here looks back at the period. The forward-looking version, stock cover, divides the stock on hand by recent daily sales.
Limits
What inventory turnover cannot tell you, and what to read next to it.
Which products are slow
A shop-wide ratio lets fast sellers cover for slow ones that hold most of the stock value. Work it out per product or category.
Whether the average is fair
If a seasonal product’s opening and closing dates both fall outside its season, the average misses the peak and turnover comes out too high. Average monthly stock values instead.
Whether high is good
Use cost of goods sold, not revenue: revenue sets selling prices against stock at cost and makes turnover look higher. A high turnover can also mean a product keeps running out.
What happens next
Turnover describes the period that has passed. It does not tell you when a product will run out or when to reorder.
This calculator works on totals. Product Metrics does not report turnover. Inventory Insights shows stock cover, reorder dates and slow stock with the reason it is slow, per product.
Inventory turnover questions, answered.
How do you calculate inventory turnover?
Divide the cost of goods sold in a period by the average inventory value at cost in that period. The average is the stock value at the start plus the stock value at the end, divided by 2. With €146,000.00 of cost of goods sold and an average of €40,000.00, turnover is 3.65.
What is a good inventory turnover ratio?
One that holds up against the product’s own history. Judge each product against its earlier periods, its season and how long a reorder takes: a product that turns often but keeps running out is understocked, and a slow product is fine if it earns a high margin and you accept the money it ties up. Look first at products whose turnover is far below the rest and which hold a lot of stock value.
How do you calculate days of inventory from turnover?
Divide the days in the period by turnover. A year of 365 days at a turnover of 3.65 gives 365 ÷ 3.65 = 100 days. For a quarter, divide 90 days by the turnover of that quarter, and for a month 30 days.
What is the difference between inventory turnover and sell-through rate?
Inventory turnover compares cost of goods sold with the average stock value at cost, usually over a year. Sell-through rate compares units sold with units available in a period, as a percentage, and suits a shorter period or a single delivery.
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See which stock sells and which sits, product by product.
Inventory Insights shows stock cover, reorder dates and slow stock with its reason for each product. Stock cover feeds Product Score and reaches Merchant Center as a custom label you approve.
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