Inventory Turnover Calculator

Inventory turnover ratio = COGS ÷ Average Inventory. It tells you how many times you sold and replenished your entire inventory in a year. A ratio of 5 means you turned over your inventory 5 times, or every 73 days. Higher is generally better, but the ideal depends on your industry and business model.

Benchmarks by industry: grocery/supermarket 15–20×, fast fashion 6–10×, apparel retail 4–6×, consumer electronics 5–8×, furniture 2–4×, manufacturing 4–8×, pharmaceuticals 3–6×. A ratio below your industry average suggests overstocking; a ratio well above may indicate stockouts and lost sales.

Days Inventory Outstanding (DIO) = 365 ÷ Inventory Turnover Ratio. For example, a turnover ratio of 5 equals 365 ÷ 5 = 73 days of inventory. DIO tells you the average number of days inventory sits before being sold — lower is better for cash flow.

Every extra day of inventory ties up cash. If your average inventory is $100,000 and you cut DIO from 90 days to 60 days, you free up roughly $33,000 in working capital. High turnover means less money locked in stock and more available for operations, payroll, or growth.

Average inventory = (Beginning Inventory + Ending Inventory) ÷ 2. Use the inventory values from the start and end of your accounting period (usually a fiscal year). For more accuracy, average monthly inventory balances throughout the year, especially if your business is seasonal.

Yes. An unusually high turnover ratio can indicate insufficient safety stock, frequent stockouts, and lost sales. It may also mean you're pricing too low and selling too fast without adequate margin. The goal is the right balance: fast enough to minimize carrying costs, slow enough to avoid stockouts.

They are the same metric, just different names. 'Stock turn' or 'stock turnover' is the British and retail industry term; 'inventory turnover' is more common in US accounting and manufacturing. Both are calculated as COGS ÷ Average Inventory.