Calculators / Inventory turnover

Inventory turnover calculator

Enter what the goods you sold cost you over the year and your stock value at the start and end. You get turnover and days of inventory.

One year

$
What the products you sold this year cost you.
$
$

Result

Average inventory
Inventory turnover
Days of inventory
Stock sold per month

The formulas

Average inventory = (start + end) ÷ 2
Turnover = cost of goods sold ÷ average inventory
Days of inventory = days in the period ÷ turnover

Worked example

A store sold goods that cost it $120,000 over the year. It held $28,000 of stock at the start and $22,000 at the end.

Average inventory(28,000 + 22,000) ÷ 2 = $25,000
Turnover120,000 ÷ 25,000 = 4.8 times
Days of inventory365 ÷ 4.8 = 76 days

On average a product sits on the shelf for about two and a half months. If the supplier needs three weeks to deliver, the store is holding far more than it needs to; the reorder point calculator helps set a leaner level.

Getting a truer number

Seasonal stock

If you stock up before the holidays, the start and end of the year can both be low and miss the peak. Averaging the stock value at the end of each month gives a fairer average inventory.

Look product by product

A good overall ratio can hide slow sellers. Work it out for your main products too. The ones turning much slower than the rest are where cash is stuck, and on Amazon FBA they also run up storage fees.

Faster is not always better

Very high turnover can mean you run out often. If customers regularly find items out of stock, you are losing sales that the ratio does not show.

Formula and examples last checked October 12, 2026.

Questions people ask

What is the inventory turnover ratio?

How many times you sell through and replace your average stock in a period, usually a year. It is cost of goods sold divided by average inventory, both at cost.

Why use cost of goods sold and not sales?

Inventory is valued at what you paid for it. Dividing sales (at selling prices) by inventory (at cost) mixes two different measures and makes turnover look higher than it is. Use cost of goods sold, which is also at cost.

What is a good inventory turnover ratio?

It depends on what you sell. Food and fast fashion turn over quickly; furniture and jewelry slowly. Compare your ratio with your own past years and with stores selling similar products, and watch for products that turn much slower than the rest of your range.

What does days of inventory mean?

How long, on average, an item sits in stock before it sells: 365 ÷ turnover. A turnover of 4.8 means stock sits for about 76 days. The longer it sits, the more cash it ties up and the more it costs to store.

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