Inventory turnover calculator
See how efficiently your inventory is moving, how many days of stock you're carrying, and how much working capital is tied up in slow-moving goods.
Enter your cost of goods sold for a period and the average value of inventory you're holding at cost. The calculator shows your annualised turnover ratio, days on hand, and the cash you'd free up by reaching a target turnover rate.
Inventory turnover calculator inputs and results
How this calculator works
Inventory turnover is annualised COGS divided by average inventory value at cost. It tells you how many times your total stock was sold and replaced over the course of a year. Days on hand is 365 divided by turnover — how long, on average, stock sits before it sells. Both figures are calculated at cost rather than at retail price to avoid distortion from differences in gross margin.
The target comparison works backwards from your target turnover rate: given the same annual COGS, what average inventory level would produce that turnover? The difference between your current inventory and that target is the amount of working capital you could free up by tightening purchasing — either by buying less in each order, ordering more frequently, or running down existing stock before reordering.
About this tool
This tool calculates inventory turnover and models the cash implications of slow-moving stock. Inputs: cost of goods sold for a selected period (monthly, quarterly, or annual), and average inventory value at cost. Outputs: annualised inventory turnover ratio, days of inventory on hand, weeks of stock remaining, and the cash that would be freed up by reaching a target turnover rate. Useful for identifying whether inventory is being managed efficiently or whether excess stock is silently tying up working capital.
Frequently asked questions
How is inventory turnover calculated?
Inventory turnover is the annualised cost of goods sold divided by the average value of inventory on hand at cost — not at selling price. It measures how many times your total stock is sold and replaced in a year. A turnover of 6 means your average inventory is sold through roughly every two months. Higher turnover generally means less cash tied up in stock and lower storage costs; too high can mean frequent stockouts.
Should I use COGS or revenue for this calculation?
Always COGS, not revenue. Inventory is held at cost, so comparing it to revenue introduces a margin distortion — a business with 60% gross margin would look like it turns inventory much faster than one with 30% margins, even if they're physically moving the same number of units. Using COGS gives a like-for-like comparison.
How do I calculate my average inventory value?
The most common approach is to add your opening inventory value (at cost) to your closing inventory value (at cost) for the period and divide by two. If your stock levels are volatile, averaging across more data points gives a more accurate result. Use cost price throughout — the amount you paid for the goods, not what you're selling them for.
What's a good inventory turnover ratio for ecommerce?
It varies by category. Fast-moving consumables and food typically turn 12–20 times per year. General ecommerce merchandise commonly runs 4–8 times. Fashion and seasonal goods are often 3–6 times but with large swings. Electronics can vary widely from 4–15 depending on whether they're commodity or trend-driven products. The more useful benchmark is your own trend over time — consistent improvement generally indicates tighter purchasing discipline.
Why does slow turnover matter beyond storage cost?
Inventory is cash. Every dollar sitting in unsold stock is a dollar not available for payroll, ads, or new product development. Slow turnover also increases the risk of markdowns — if a product doesn't sell through in time, you often have to discount it to clear it, which directly compresses margin. And the longer stock sits, the higher the probability of damage, obsolescence, or seasonality making it harder to sell at full price.