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Inventory Turnover Ratio Calculator

Calculate inventory turnover ratio and days inventory outstanding from COGS and average inventory, with industry benchmarks.

Cost of Goods Sold (COGS) ($)

Beginning Inventory ($)

Ending Inventory ($)

⚠️ Please fill in all required fields with valid numbers.

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Everyday Uses

Stock efficiency

See how many times a year inventory sells through — slow turns tie up cash.

Buying decisions

Use turnover by product line to reorder winners and clear the shelf-warmers.

Cash flow release

Improving turnover frees cash sitting in stock — quantify the opportunity.

Retail benchmarking

Compare your turns against category norms to spot over-stocking.

Perishables and obsolescence

Food, fashion and consumer electronics lose value while they sit. A slow turn in those categories is a write-off that has happened but not yet been recognised.

Too fast is also a problem

A very high turn can mean stockouts and lost sales rather than efficiency. The ratio reads beautifully right up until you count the orders you could not fill.

Frequently Asked Questions

What is the inventory turnover ratio formula?

Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory, where Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2. It measures how many times a business sells through its entire inventory over a given period, usually a year.

Why use average inventory instead of ending inventory?

Inventory levels fluctuate throughout the year — using only the ending balance can distort the ratio if that snapshot happens to be unusually high or low (e.g., right after a big seasonal restock). Averaging the beginning and ending balances smooths out that timing distortion and gives a more representative figure.

What is a good inventory turnover ratio?

It varies heavily by industry: grocery stores often turn inventory 10–15 times a year due to perishables, apparel/fashion retailers 4–6 times, electronics 6–8 times, auto dealers 8–12 times, and furniture retailers 3–5 times. Compare against your specific industry rather than a universal number.

How do I read "days inventory outstanding"?

Days Inventory Outstanding = 365 ÷ Inventory Turnover Ratio. It converts the turnover ratio into an easier-to-grasp number: the average number of days inventory sits before being sold. A turnover ratio of 8 means roughly 46 days of inventory on hand at any given time.

Can inventory turnover be too high?

Yes. Extremely high turnover can mean inventory levels are too lean, leading to stockouts, missed sales, and unhappy customers when demand spikes unexpectedly. The goal is an efficient balance — fast enough to avoid tying up cash in excess stock, but with enough buffer to meet demand reliably.

How can a business improve inventory turnover?

Improve demand forecasting to avoid overstocking, negotiate smaller and more frequent supplier deliveries (just-in-time), discount or liquidate slow-moving stock, and discontinue chronically poor-selling SKUs that tie up warehouse space and cash.