Free Inventory Turnover Ratio Calculator
What is Inventory Turnover?
Inventory turnover is a crucial business metric that measures how many times your inventory is sold and replaced over a specific period. It indicates how efficiently a company manages inventory and generates sales from its investment in stock.
How to Use This Calculator
Enter your cost of goods sold (COGS) and the average inventory value for your selected time period. Our analyzer will instantly calculate your inventory turnover ratio and days to sell inventory, providing insights into your operational efficiency.
Inventory Turnover Analyzer
Understanding Inventory Turnover
- Cost of Goods Sold (COGS): Total cost of products sold during your selected time period.
- Average Inventory Value: The average dollar value of inventory on hand during your time period.
- Inventory Turnover Ratio: How many times you've sold and replaced your inventory in the given period.
- Days to Sell Inventory: The average number of days it takes to sell your entire inventory (365 ÷ turnover ratio).
Why Inventory Turnover Matters
A well-optimized inventory turnover ratio helps your business in numerous ways:
- Reduced storage costs and spoilage/obsolescence risks
- Improved cash flow and working capital efficiency
- Identification of bestsellers and underperforming products
- Better inventory forecasting and purchasing decisions
- Increased overall profitability and operational efficiency
Pro Tip
Optimal inventory turnover varies by industry. Retail typically targets 4-6 turns annually, while grocery stores might aim for 12+ turns. Low turnover suggests overstocking or weak sales, while extremely high turnover might indicate stock shortages and missed sales opportunities.