Business
Inventory Turnover Calculator
See how many times stock is sold and replaced in a year from cost of goods sold and average inventory.
The result shows how many times stock is sold and replaced in a year, and how many days a typical item stays on the shelves.
Formula
Inventory turnover = cost of goods sold divided by average inventory value. Days of stock = 365 divided by turnover.
How it works
Divide what the stock cost to sell in a year by the average value sitting on shelves. High turnover means stock moves fast and little cash is tied up; very low turnover can mean overstocking or slow sellers.
Worked example
For example, $120000 ÷ $20000 = 6.00 times per year, so stock lasts about 61 days on average (365 ÷ 6.00 = 60.83).
FAQs
Why average inventory, not ending stock?
Averages smooth out seasonal spikes and one-off stock counts, giving a fairer yearly picture.
Is higher always better?
Not if shelves run empty and sales are lost. The aim is fast movement without frequent stockouts.
What is a healthy figure?
It varies hugely by industry. Fresh food turns fast, furniture slowly, so compare within the same trade.
Estimates only, not financial advice. Check your figures before making a business decision.
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