Finance & Business
Inventory Turnover Calculator - Calculate Turnover Ratio & Days
Calculate inventory turnover ratio, days in inventory, and inventory efficiency. Analyze how quickly inventory sells and optimize stock levels for better cash flow and profitability.
Use Inventory Turnover Calculator - Calculate Turnover Ratio & Days to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
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About this tool
Our Inventory Turnover Calculator is the most comprehensive free tool for analyzing inventory efficiency and management. Inventory turnover measures how many times you sell and replace inventory during a period - one of the most critical metrics for retail, wholesale, manufacturing, and e-commerce businesses. High turnover means inventory sells quickly, minimizing storage costs and freeing cash. Low turnover indicates slow-moving inventory that ties up capital and risks obsolescence. Understanding your turnover helps you optimize purchasing, pricing, and cash flow while avoiding stockouts and overstock situations.
Inventory Turnover Ratio is calculated as Cost of Goods Sold ÷ Average Inventory. A ratio of 6 means you sell through your entire inventory 6 times per year. Higher ratios are generally better, indicating efficient inventory management and strong sales relative to stock levels. However, extremely high ratios (20+) may signal inadequate stock levels and frequent stockouts. Optimal turnover varies by industry: grocery stores average 15-20x, electronics 6-8x, furniture 4-6x, luxury goods 2-4x. Fast fashion aims for 12-15x while fine jewelry may be 1-2x. Compare your ratio to industry benchmarks to gauge performance.
Days in Inventory (also called Days Sales of Inventory or DSI) converts turnover into a more intuitive metric: how many days inventory sits before selling. Formula: 365 ÷ Turnover Ratio. If turnover is 6, days in inventory is 61 days. Lower days in inventory means faster cash conversion. Combined with Days Sales Outstanding (collection time) and Days Payable Outstanding (payment time), it forms the Cash Conversion Cycle - how long capital is tied up in operations. Reducing days in inventory directly improves cash flow and return on investment.
The calculator also computes inventory-to-sales ratio, showing what percentage of sales is tied up in inventory. Lower ratios indicate efficiency. It calculates gross margin return on inventory investment (GMROI), measuring profit generated per dollar invested in inventory - essential for evaluating inventory productivity. Understanding these metrics helps you make smarter purchasing decisions, identify slow-moving items, optimize reorder points, and improve cash flow. The tool is completely free, requires no registration, and works entirely in your browser. Perfect for retailers, wholesalers, manufacturers, e-commerce businesses, and supply chain managers.
Usage examples
Grocery Store
$2M COGS, $150K average inventory
Turnover: 13.3x, Days: 27 days, Excellent for perishables
Electronics Retailer
$5M COGS, $800K average inventory
Turnover: 6.25x, Days: 58 days, Industry standard
Furniture Store
$1.5M COGS, $400K average inventory
Turnover: 3.75x, Days: 97 days, Typical for furniture
Fashion Retailer
$3M COGS, $250K average inventory
Turnover: 12x, Days: 30 days, Fast fashion target
How to use
- Enter your Cost of Goods Sold (COGS) for the period
- Input beginning inventory value
- Input ending inventory value (calculator computes average)
- Optionally enter revenue for additional metrics
- View turnover ratio, days in inventory, and efficiency analysis
- Compare results to industry benchmarks
Benefits
- Calculate inventory turnover ratio
- Days in inventory analysis
- Average inventory computation
- Inventory-to-sales ratio
- GMROI (Gross Margin Return on Investment)
- Industry benchmark comparisons
- Cash flow impact analysis
- Instant calculations as you input data
- Identify slow-moving inventory
- Mobile-friendly for inventory management
- No registration required - free
- Essential for retail and wholesale
FAQs
What is a good inventory turnover ratio?
Good turnover varies by industry. Grocery/food: 15-20x (perishables). Apparel/fashion: 8-12x. Electronics: 6-8x. Furniture: 4-6x. Automotive parts: 8-10x. Jewelry: 1-3x. Wholesale: 8-12x. Higher is generally better but too high (20+) may mean stockouts. Low turnover (under 2x) indicates slow-moving inventory, excess stock, or weak sales. Compare to industry averages and track trends over time.
How do I calculate inventory turnover?
Formula: Inventory Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory. Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2. Use COGS, not sales revenue. Use cost values for inventory, not retail prices. Example: $600K COGS ÷ $100K average inventory = 6x turnover. This means you sold through your entire inventory 6 times during the period. Always use the same time period for COGS and average inventory (typically annual).
What is days in inventory and how is it calculated?
Days in Inventory (DSI) measures how many days inventory sits before selling. Formula: 365 days ÷ Inventory Turnover Ratio. Example: 365 ÷ 6x turnover = 61 days. Lower is better for most businesses - faster conversion to cash. DSI is part of the Cash Conversion Cycle. Also called Days Sales of Inventory or Inventory Days. Track monthly to spot trends. Increasing DSI signals slowing sales or over-purchasing. Decreasing DSI means improving efficiency or potential stockouts.
How can I improve my inventory turnover?
Increase sales: better marketing, competitive pricing, improved merchandising, expand distribution. Reduce inventory: implement just-in-time ordering, improve demand forecasting, eliminate slow-movers (discount/clearance), reduce variety/SKU count, negotiate smaller minimum orders. Improve operations: faster fulfillment, better inventory tracking, ABC analysis (focus on top sellers), automatic reordering, reduce lead times. Higher turnover improves cash flow, reduces storage costs, minimizes obsolescence, and increases ROI.
What is GMROI and why does it matter?
GMROI (Gross Margin Return on Inventory Investment) measures profit generated per dollar invested in inventory. Formula: Gross Margin ÷ Average Inventory Cost. Example: $200K gross margin ÷ $100K average inventory = 2.0 or 200%. This means you earn $2 gross profit for every $1 invested in inventory. Minimum acceptable GMROI is typically 2.0-3.0 (200-300%). Higher is better. Use GMROI to evaluate product lines, compare vendors, and make purchasing decisions. Focus buying on high-GMROI items.
What is the cash conversion cycle?
Cash Conversion Cycle (CCC) measures how long cash is tied up in operations. Formula: Days Inventory Outstanding + Days Sales Outstanding - Days Payable Outstanding. Example: 60 days inventory + 45 days receivables - 30 days payables = 75 days. This means 75 days from buying inventory to collecting cash. Lower CCC is better - less working capital needed. Reduce CCC by: improving inventory turnover, accelerating collections, extending payables (carefully). CCC is crucial for cash flow management.
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