Inventory Turnover Calculator

The Inventory Turnover Calculator measures how many times inventory is sold or replaced during a period from cost of goods sold and average inventory.

$\text{Inventory turnover}=\frac{\text{COGS}}{\text{Average inventory}}$ $\text{Days inventory outstanding}=\frac{\text{Days in period}}{\text{Turnover}}$

Questions

What does high turnover mean?

It can indicate efficient stock movement, but very high turnover may also signal stockouts or under-ordering.

Should I use sales or COGS?

Standard turnover uses COGS because inventory is recorded at cost. Use consistent accounting periods.

Does this include seasonal effects?

Only if your average inventory and period inputs represent them.

Limitations

Industry, product mix, markdowns, shrinkage, and accounting policy affect interpretation. Compare like periods and businesses.