How fast inventory sells through. The Inventory Turnover Calculator takes cost of goods sold for the year, inventory at the start, inventory at the end and returns inventory turnover plus days to sell the average stock, average inventory. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Inventory Turnover Calculator works
How many times a year the stock is sold and replaced. Grocers turn 12–20 times, jewellers once or twice; a falling turnover means stock is building up.
Worked example
With the example values (cost of goods sold for the year of $900,000, inventory at the start of $120,000, inventory at the end of $180,000), the inventory turnover is 6.00x; days to sell the average stock 61 days, average inventory $150,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is inventory turnover calculated?
inventory turnover = cost of goods sold ÷ average inventory.
Which figures do I need?
Cost of goods sold for the year, inventory at the start, inventory at the end. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
