Inventory Turnover Calculator
Calculate inventory turnover from COGS and average inventory, plus the days-sales-of-inventory that shows how long stock sits on the shelf.
How it works
Inventory turnover = COGS ÷ average inventory · Average inventory = (beginning + ending) ÷ 2 · Days sales of inventory = days in period ÷ turnover
Inventory turnover counts how many times you sell and replace your stock over a period: cost of goods sold divided by the average inventory held (both at cost). A higher turnover means capital is not sitting idle in the warehouse. Its mirror image, days sales of inventory, converts the same ratio into the average number of days an item waits before it sells — often the more intuitive figure for operations.
Worked example
With $500,000 in annual COGS and $100,000 of average inventory, turnover is 500,000 ÷ 100,000 = 5 times a year. Days sales of inventory is 365 ÷ 5 = 73 days — stock sits about ten weeks before selling.
Frequently asked questions
Should turnover use COGS or sales?
Use cost of goods sold, because inventory is carried at cost. Dividing sales (which include your markup) by inventory at cost overstates turnover. Some analysts use sales for a rough figure, but COGS ÷ average inventory is the standard.
What is a good inventory turnover?
It depends heavily on the industry: grocery and fast fashion turn stock dozens of times a year, while heavy machinery or jewelry turn only a few. Compare against peers — too low ties up cash and risks obsolescence, too high risks stockouts.
What is days sales of inventory?
DSI is the average number of days inventory sits before being sold, calculated as days in the period divided by turnover. Five turns a year equals 365 ÷ 5 = 73 days. Lower DSI generally means leaner, more efficient inventory.
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Educational estimate, not financial advice.