Inventory Turnover Calculator
Free inventory turnover calculator: divide COGS by average inventory to get the turnover ratio and days inventory outstanding (DIO) for any period.
About the Inventory Turnover Calculator
Inventory turnover measures how many times a business sells and replaces its stock in a period: turnover = cost of goods sold ÷ average inventory, where average inventory = (beginning + ending) ÷ 2. Its companion metric, days inventory outstanding (DIO) = period days ÷ turnover, tells you how many days the average item sits on the shelf.
This free inventory turnover calculator computes both from your COGS and inventory figures, for any period length — 365 days for a year or 90 for a quarter. Retailers, wholesalers and e-commerce sellers across Pakistan and India use it to spot overstocking (cash trapped on shelves) or understocking (lost sales). Healthy ratios vary widely by industry: groceries turn 15-20× a year while heavy machinery may turn 1-3×.
How to Use the Inventory Turnover Calculator
- 1Enter cost of goods sold for the period.
- 2Enter beginning and ending inventory — or just one figure if that is all you have.
- 3Set the period length in days (365 for a year).
- 4Read the turnover ratio and days inventory outstanding.
Frequently Asked Questions
How is inventory turnover calculated with an example?
Turnover = COGS ÷ average inventory. With COGS of 1,200,000, beginning inventory 250,000 and ending 350,000: average = 300,000, turnover = 1,200,000 ÷ 300,000 = 4×. DIO = 365 ÷ 4 = 91.25 days of stock on hand.
Should I use sales or COGS in the formula?
COGS, because inventory is carried at cost. Using revenue inflates the ratio by your margin — a shop with 40% gross margin would overstate turnover by two-thirds. If only revenue is available, note the ratio is not comparable with COGS-based benchmarks.
What is a good inventory turnover ratio?
It is industry-specific: fresh groceries 15-20×+, fashion retail 4-6×, electronics 6-8×, furniture 2-4×, heavy machinery 1-3×. Compare against your own trend and direct competitors. Rising turnover with stable margins is usually the healthiest signal.
Is a very high turnover always good?
Not always — extremely high turnover can mean chronic understocking, stockouts and missed sales, or over-reliance on emergency reordering at worse prices. The goal is balance: enough stock to serve demand, little enough that cash is not locked up. DIO makes this concrete in days.