What This Calculator Estimates
This calculator estimates how many times your inventory is sold and replaced over a period, and how many days on average it takes to sell through your stock.
Formula / Method Used
Average Inventory = (Beginning + Ending Inventory) ÷ 2. Inventory Turnover = Cost of Goods Sold ÷ Average Inventory. Days in Inventory = 365 ÷ Turnover Ratio.
Worked Example
With $240,000 in COGS, $35,000 beginning inventory, and $25,000 ending inventory, average inventory is $30,000, giving a turnover ratio of 8.0 — meaning inventory sells through about every 46 days.
How to Interpret the Result
Higher turnover generally means efficient inventory management and fresher stock. Compare your ratio against industry benchmarks — retail and grocery tend to run high, while furniture and heavy equipment run lower.
Common Mistakes
- Using sales revenue instead of cost of goods sold in the formula.
- Comparing turnover ratios across very different industries.
- Not accounting for seasonal inventory swings within the period measured.
- Treating higher turnover as always better, ignoring stockout risk.
Related Calculators
Inventory Reorder Calculator · Profit Margin · Break-Even Sales
Frequently Asked Questions
What does inventory turnover measure?
Inventory turnover measures how many times your average inventory is sold and replaced over a given period.
What is a good inventory turnover ratio?
It varies by industry, but a higher ratio generally indicates efficient inventory management, while a very low ratio may signal overstocking.
How do I calculate average inventory?
Average Inventory = (Beginning Inventory + Ending Inventory) / 2 for the period you're measuring.
What does days in inventory mean?
Days in inventory shows on average how many days it takes to sell through your inventory, calculated from the turnover ratio.
Can turnover be too high?
Yes, extremely high turnover can indicate insufficient stock levels, risking stockouts and lost sales.
Last updated: July 2026