Calculator
Inventory Turnover Calculator
Inventory turnover shows how many times you sell and replace your stock in a year — and how many days, on average, goods sit before selling. Slow-moving inventory ties up cash and risks obsolescence; fast turnover frees up working capital. This calculator takes your cost of goods sold and average inventory to return the turnover ratio and days of inventory, helping traders, manufacturers, and mills judge whether stock is moving efficiently.
Annual cost of the goods you actually sold.
Average stock held (opening + closing) ÷ 2.
Use cost of goods sold (not revenue) for accuracy, and the average of opening and closing inventory. A “good” ratio is highly industry-specific — perishables turn over far faster than machinery or jewellery.
What your result means
- Higher turnover means stock sells quickly and ties up less cash — but too high can signal frequent stockouts and lost sales.
- Days-of-inventory (365 ÷ turnover) is the same story in days: it is roughly how long cash stays locked in the godown.
- Always compare turnover to your own industry — a grocer turns stock far faster than a furniture showroom.
How to use this calculator
- Find your annual cost of goods sold (from your P&L), not revenue.
- Calculate average inventory: (opening stock + closing stock) ÷ 2.
- Enter both figures to get the turnover ratio.
- Read days inventory to see how long stock sits before selling.
- Compare against last year and against peers in your trade to judge efficiency.
The formula
Inventory turnover = Cost of goods sold ÷ Average inventory. Days inventory = 365 ÷ Inventory turnover. Average inventory = (opening + closing stock) ÷ 2.
Worked example
A trader has annual COGS of ₹60,00,000 and average inventory of ₹10,00,000. Turnover = 60 ÷ 10 = 6 times a year, and days inventory = 365 ÷ 6 ≈ 61 days. So stock sells through roughly every two months. If a competitor turns over 9 times (≈41 days), they free up cash faster and carry less risk of dead stock.
When to use it
- Spotting slow-moving or dead stock that is tying up cash.
- Comparing inventory efficiency year over year or against competitors.
- Planning purchase cycles so you do not overstock.
- Supporting a working-capital loan application with operational metrics.