1
Match the cost basis
Define the inventory category, such as finished parts. Use the cost of parts sold during the same period. Revenue includes a margin and would raise the turnover ratio relative to a cost-based calculation.
Your inputs
Cost of goods sold, excluding sales margin. Match the inventory scope below. Enter all values in one currency.Please enter a valid value within the stated range.
Inventory value at the start, at acquisition or manufacturing cost.Please enter a valid value within the stated range.
Inventory value at the end, on the same cost basis.Please enter a valid value within the stated range.
days
Calendar days, such as 365 for a year or 90 for a quarter. Whole number from 1 to 366.Please enter a valid value within the stated range.Inventory turns in the period
Average inventory
Days in inventory
Annualized to 365 days
Daily cost of goods sold
Breakdown
Review scenarios
Arithmetic scenario with unchanged cost of goods sold and period length. Lower inventory is an assumption. Service levels, safety stock and purchasing lead times are outside this calculation.
20% lower average inventory: turns
20% lower average inventory: inventory days
Recommendations
Compare the same inventory categories and valuation methods across periods. High turnover can also accompany stock shortages. Check availability and delivery performance before reducing inventory.
Please check your inputs. Required values cannot be blank.
Inventory Turnover Calculator: Guide
2
Enter opening and closing stock
The calculator takes the simple average of opening and closing inventory. For seasonal stock, a time-weighted average may be more useful. Enter your own calculated average in both fields to use it here.
3
Read period and annualized turns
Turnover applies to the entered number of days. A second result converts it to a 365-day basis. This arithmetic annualization does not forecast next year or adjust for seasonal demand.
The formulas at a glance
Average inventory
Average = (opening + closing inventory) ÷ 2Use the same inventory scope and cost valuation.
Inventory turnover
Turns = cost of goods sold ÷ average inventoryNumber of turns during the chosen period.
Days in inventory
Days in period ÷ turnsWith zero cost of goods sold, inventory days are undefined.
Annualized comparison
Turns × 365 ÷ days in periodA common calendar basis without a seasonal forecast.
Worked example: 1.2 million cost of goods sold
Illustrative annual data: 180,000 opening inventory, 220,000 closing inventory and 1,200,000 cost of goods sold, all in the same currency and measured at cost.
| Item | Calculation | Result |
|---|---|---|
| Average inventory | (180,000 + 220,000) ÷ 2 | 200,000 |
| Inventory turns | 1,200,000 ÷ 200,000 | 6 |
| Days in inventory | 365 ÷ 6 | 60.83 days |
| Inventory scenario | 200,000 × 0.8 | 160,000 |
| Turns scenario | 1,200,000 ÷ 160,000 | 7.5 |
Limits of the calculation
- Average inventory must be positive. Two zero stock values produce an undefined turnover ratio. Zero cost of goods sold gives zero turns; inventory days remain undefined.
- A two-point average may miss seasonal peaks. Average monthly or daily stock values can represent fluctuating inventories more closely.
- Raw material, work in process and finished goods require a matching cost or consumption measure. This calculator does not determine order quantities.
Frequently asked questions
Cost basis and revenue basis
This calculator divides cost of goods sold by inventory valued at cost. A sales-to-inventory ratio uses a different valuation and is not directly comparable.
Turnover and reorder point
Turnover describes inventory use over a period. Reorder point sets the stock level that triggers replenishment. Purchasing lead time and safety stock are outside this model.
Quarterly reporting
Enter cost of goods sold and stock values for the quarter, together with its calendar days. The main turnover result applies to that quarter.
Calculation source: OpenStax: Inventory turnover and days in inventory