Inventory Turnover Calculator
Stock turns per year and days of cover from COGS.
What it does
Inventory turnover tells how many times a business sold and replaced its stock in a period. A grocer with thin margins needs fast turns, while a machine shop with costly parts can live with slow turns. The ratio links the income statement to the balance sheet: cost of goods sold over average inventory.
The tool above needs two numbers from the same period. Turnover of 5 x on $500,000 of cost over $100,000 of stock means the shelves cycled five times in the year. Days on hand translates the same fact into time: 73 days of cover at the current pace, or 0.42 turns a month. Managers watch days because purchase lead times and cash needs are set in days, not in multiples.
Context decides whether a result is healthy. A turnover of 1.6 x with 228.1 days of cover may be normal for yachts and alarming for milk. Trends matter more than one reading: falling turnover with flat sales often means overbuying or dead lines, while rising turnover with stockouts means the shelves are too thin and customers leave empty handed.
This page uses the standard year of 365 days and average inventory. It does not adjust for seasonality, consignment, or LIFO versus FIFO cost layers. For a quarter, swap 365 for 90 days and use the same quarter for both inputs.
How to use
- Enter cost of goods sold for the period.
- Enter average inventory for the same period.
- Read turnover in times per year first.
- Read days on hand for cover at current pace.
- Compare against last period and peers in the same trade.
- If days look long, check for dead stock before ordering more.
Formula
- COGS
- Cost of goods sold for the period, in dollars.
- AVG
- (Beginning inventory plus ending inventory) / 2, in dollars.
- Days
- Cover in days at the current sales pace, 365 / turnover.
Average inventory is (beginning plus ending) / 2 for the same period as COGS. At zero inventory the ratio has no meaning, and at very low stock a tiny count change swings the answer a lot.
Worked example
Example: $500,000 sales cost on $100,000 stock
Defaults: $500,000 COGS with $100,000 average inventory for one year.
- Inputs: cost of goods sold $500,000, average inventory $100,000.
- Turnover: 500,000 / 100,000 is 5 x.
- Days on hand: 365 / 5 is 73 days.
- Per month: 5 / 12 is 0.42 x per month.
- Fast stock with about two and a half months of cover. Tool shows 5 x, 73 days, 0.42 x per month.
Reference table
| COGS / Avg | Turnover | Days |
|---|---|---|
| 500,000 / 100,000 | 5 x | 73 days |
| 60,000 / 37,500 | 1.6 x | 228.1 days |
| 200,000 / 50,000 | 4 x | 91.3 days |
| 90,000 / 30,000 | 3 x | 121.7 days |
| 120,000 / 80,000 | 1.5 x | 243.3 days |
Limits
- One period, one product pool. Mixed trades blur the meaning.
- Average inventory hides spikes. Seasonal peaks need monthly math.
- Cost layers (LIFO, FIFO) shift COGS and the ratio with it.
- No read on margins or stockouts. Pair with fill rate and gross margin.
Common mistakes
- Mixing yearly COGS with one month ending stock.
- Using sales instead of COGS, which inflates turns.
- Comparing a grocer to a jeweler as if equal.
- Ignoring dead stock that flatters average age.
- Chasing high turns into empty shelves and lost sales.
Try it yourself
Quick checks. Answers sit tucked under each question.
COGS $60,000, average $37,500?
Turnover is 60,000 / 37,500 is 1.6 x. Days are 365 / 1.6 is 228.1 days. Monthly is 0.13 x per month.
COGS $200,000, average $50,000?
Turnover is 200,000 / 50,000 is 4 x. Days are 365 / 4 is 91.3 days. Monthly is 0.33 x per month.
Questions
How is inventory turnover figured?
Turnover = COGS / average inventory. Here 500,000 / 100,000 is 5 x.
How are days on hand figured?
Days = 365 / turnover. Here 365 / 5 is 73 days of cover at current sales pace.
Should I use average or ending inventory?
Average is (beginning plus ending) / 2. Ending only is simpler but swings with one date.
What is a good turnover?
Industry sets the bar. Groceries turn fast, machinery turns slow. Compare within one trade and across years.
What if inventory is zero?
Zero or negative inventory breaks the ratio. Check for data errors or consignment stock before trusting it.
Can I use this for a quarter?
Yes. Days uses 365 for a full year. For a quarter use 90 or 91 days over the same period COGS.