Inventory Turnover Ratio Calculator
Calculate inventory turnover ratio, days sales in inventory, and inventory efficiency metrics
About this calculator
The Inventory Turnover Ratio Calculator helps businesses measure how efficiently they manage inventory by calculating how many times inventory is sold and replaced over a specific period. This essential financial metric reveals inventory management effectiveness, cash flow efficiency, and operational performance. Higher turnover ratios typically indicate better inventory management, faster sales cycles, and reduced carrying costs, while lower ratios may suggest overstocking or slow-moving products that tie up working capital.
How to use
Enter your Cost of Goods Sold (COGS) for the period and your average inventory value. The calculator will automatically compute your inventory turnover ratio, days sales in inventory, and related efficiency metrics. Use annual figures for the most accurate analysis, and compare results against industry benchmarks to assess your inventory management performance.
Frequently asked questions
What is a good inventory turnover ratio?
A good ratio varies by industry, but generally ranges from 4-6 times per year. Higher ratios indicate efficient inventory management and strong sales performance.
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 sales in inventory mean?
Days sales in inventory shows how many days it takes to sell your entire inventory, calculated by dividing 365 by the inventory turnover ratio.