Inventory Turnover Calculator
Calculate inventory turnover ratio and average days to sell inventory
About this calculator
The Inventory Turnover Calculator helps businesses measure how efficiently they manage their inventory by calculating the inventory turnover ratio and average days to sell inventory. This essential financial metric indicates how many times inventory is sold and replaced over a specific period, revealing whether you're overstocking, understocking, or maintaining optimal inventory levels. A higher turnover ratio generally indicates better inventory management and stronger sales performance, while knowing the average days to sell helps with cash flow planning and purchasing decisions.
How to use
Enter your Cost of Goods Sold (COGS) for a specific period and your average inventory value during that same period. The calculator will automatically compute your inventory turnover ratio by dividing COGS by average inventory. It will also calculate the average days to sell inventory by dividing 365 days by the turnover ratio, showing how long it takes to sell your entire inventory.
Frequently asked questions
What is a good inventory turnover ratio?
A good ratio varies by industry, but generally 4-6 is healthy for most businesses. Higher ratios indicate faster inventory movement and better efficiency.
How do I calculate average inventory?
Add your beginning inventory value and ending inventory value for the period, then divide by two to get the average inventory amount.
What does days to sell inventory mean?
This metric shows the average number of days it takes to completely sell your inventory, helping with reorder timing and cash flow planning.