Business

Inventory Turnover Calculator

Measure how often inventory is sold and replaced.

MyToolPantry.comInventory Turnover Calculator

Inventory Turnover Calculator result

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Scenario AAll assumptions are visible.

Cost of goods sold for period ($)Beginning inventory ($)Ending inventory ($)Days in period

Primary result5×Inventory turnover

Inventory turnover5×Average days inventory on hand73 daysAverage inventory$100,000.00Average inventory as share of COGS20%

What this means: Use turnover and days on hand as trend measures; seasonality, stockouts, product mix and industry norms determine whether the level is appropriate.

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Formula, assumptions & limitations

Inputs used: Cost of goods sold for period ($); Beginning inventory ($); Ending inventory ($); Days in period.

Method: Average inventory = (beginning inventory + ending inventory) ÷ 2. Turnover = cost of goods sold ÷ average inventory. Days inventory = days in period ÷ turnover.

COGS and inventory must use the same period and valuation method. A two-point average may misrepresent seasonal or rapidly changing inventory. Compare turnover only with the same business over time or a genuinely comparable industry benchmark; higher is not automatically better.

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How this tool works

Inventory turnover compares cost of goods sold with average inventory for the same period; days in inventory converts that rate into an approximate holding period.

Assumptions

COGS, beginning inventory, ending inventory, and days cover one consistent period and valuation basis. Average inventory uses the two entered endpoints.

Limits to know

COGS and average inventory must cover the same period and use consistent valuation. Seasonality, write-downs, stockouts, product mix, and ending-inventory shortcuts can distort the ratio.