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Inventory Turnover Calculator

This inventory turnover calculator shows how many times your stock is sold and replaced in a period, and how many days an item sits on the shelf on average. Enter cost of goods sold and your opening and closing inventory to see the result at once.

Source: Wikipedia – Inventory turnover (Wareneinsatz ÷ durchschnittlicher Lagerbestand, Days in inventory). Updated: .

what the goods you sold cost you, not sales revenue
valued at cost
valued at cost
days
365 for a year, 90 for a quarter, 30 for a month
% a year
used for the carrying-cost rate; 0 hides it
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Result

Inventory turnover
6 turns in the period – an item stays in stock 60.8 days on average
Average inventory
100,000.00
Days in inventory
60.8 days
Days of supply at the end
66.9 days
Carrying-cost rate
0.83 %
Working
  • Average inventory = (opening + closing inventory) ÷ 2 = (90,000.00 + 110,000.00) ÷ 2 = 100,000.00
  • Inventory turnover = cost of goods sold ÷ average inventory = 600,000.00 ÷ 100,000.00 = 6
  • Days in inventory = days ÷ turnover = 365 ÷ 6 = 60.8 days
  • Carrying-cost rate = interest rate × days in inventory ÷ 365 = 5% × 60.8 ÷ 365 = 0.83%
Use the same valuation for cost of goods sold and inventory, and average several dates instead of only the first and last day if you can. Seasonal stock skews a two-point average.

How it is calculated

Inventory turnover tells you how many times the average stock is used up and replaced in a period. A turnover of 6 a year means an item stays in the warehouse for about two months.

How it is calculated

Reading the result

A high turnover ties up little capital and lowers the risk of dead stock, but an extreme value can point to frequent stock-outs. A low turnover means money is sitting on shelves. What counts as good depends on the industry: fresh food turns in days, furniture or machinery in months. Compare against your own earlier periods and your sector rather than a fixed number.

Cost of goods sold comes from the cost of goods sold calculator, what remains per item is shown by the margin calculator, and the sales volume you need is the job of the break-even calculator.

Frequently asked questions

How do you calculate inventory turnover?

Divide cost of goods sold for the period by average inventory, where average inventory is (opening + closing) ÷ 2. With 600,000 of cost of goods sold and 100,000 of average stock, turnover is 6.

What are days in inventory?

The average number of days an item is held before it is sold: days in the period divided by the turnover. With 6 turns a year that is about 61 days.

Is a high inventory turnover always good?

Usually yes, because less money is tied up. If it is extremely high, stock may be too lean and you risk running out. The right level depends on your industry, lead times and range.

Why use cost of goods sold instead of sales?

Inventory is valued at cost. If you divide sales by it, your markup sits in the numerator and turnover looks higher than it is. Cost of goods sold keeps both sides on the same basis.

What does the carrying-cost rate show?

How many percent of the goods' value the financing of your stock costs while it sits in the warehouse. It equals the interest rate times days in inventory divided by 365 – the shorter the stay, the lower the cost.

Sources and legal basis

As of: · Editorial policy

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