Inventory turnover calculator
How many times a year your stock sells through, and how long it sits.
How it works
Turnover = COGS ÷ average inventory value · Days = 365 ÷ turnover
Both figures must be at cost, not at retail — mixing a retail stock valuation with a cost of goods sold figure inflates turnover and is the most common error in this calculation. Higher turnover means less cash tied up, but pushed too far it means running out. The days figure is usually the more useful of the two because it is in units a person can picture.
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Frequently asked questions
- Average inventory over what?
- Opening plus closing divided by two is the usual approximation. A monthly average across the year is better if you are seasonal, because two year-end snapshots can both land in your quietest month.
- Should I use revenue instead of COGS?
- No. Revenue is at selling price and stock is at cost, so dividing one by the other compares two different things and overstates turnover by your whole gross margin.
- What is a good turnover?
- Entirely sector-dependent. Fresh food turns dozens of times a year; heavy machinery may turn twice. Track your own direction of travel rather than a benchmark.