Inventory Turnover Calculator

Inventory turnover is cost of goods sold divided by average inventory, and it answers one question: how many times did the shelf empty during the period? Everything contentious about it comes from which inventory figure sits in the denominator.

Cost of goods soldThe cost of the stock that was sold over the period, never revenue.Opening inventoryStock on hand at the start of the period, valued at cost.Closing inventoryStock on hand at the end of the period, valued on the same basis.Days in the period365 for a calendar year, or 360 under the convention some firms use.

Inventory turnover

Average inventory: 60,000
Days of inventory: 45.625
Cost of goods sold per day: 1,315.0685

Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.

The formula this calculator uses

Inventory turnover = COGS / average inventory

COGS: Cost of goods sold over the period — the cost of the stock that was actually sold
AVG: Average inventory, equal to (opening + closing) / 2
T: Turnover, the number of times the shelf emptied in the period
D: Days of inventory, equal to days in the period divided by turnover

How to check the result by hand

1
Fix the period and pull the matching cost of goods sold
Decide whether you are measuring a year, a quarter or a month, then take cost of goods sold for exactly that span. The worked case uses 480000 for a full year, and the same figure on a quarter would describe a completely different business. Never pair an annual cost of goods sold with a quarterly inventory figure, because the two sides of the fraction then measure different things.
2
Establish opening and closing inventory on the same basis
Take the stock value at cost at the start and end of the period. On the worked case those are 55000 and 65000. Both must be valued the same way: mixing a cost-based opening figure with a retail-priced closing figure corrupts the average before any ratio is computed.
3
Average the two inventory figures
Add the opening and closing balances and halve them: (55000 + 65000) / 2 = 60000.0. Using the closing 65000 alone would give 7.384615384615385 turns and the opening 55000 alone would give 8.727272727272727, so the average of 60000.0 is the fairer denominator.
4
Divide cost of goods sold by average inventory
480000 / 60000.0 = 8.0, so the shelf emptied eight times in the year. This ratio is dimensionless: the currency cancels, which is exactly why turnover is comparable across firms of very different size, provided the underlying definitions match.
5
Convert to days and compare against history and sector
365 / 8 = 45.625 days of inventory, or roughly forty-six days of stock on hand. Cost of goods sold per day is 480000 / 365 = 1315.0684931506848. Read 45.625 next to the same firm's prior years and to close competitors, never against an absolute benchmark, and check it beside stock-out records before calling a high figure good.

For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Inventory Turnover page.