How to use this calculator
- Enter or choose cost of goods sold.
- Enter or choose opening inventory (at cost).
- Enter or choose closing inventory (at cost).
- Enter or choose days in period.
- The inventory turnover updates as you type. Use Copy result or Share to keep it.
Method
Average inventory = (Opening + Closing) ÷ 2; Turnover = COGS ÷ Average inventory; Days of inventory = Days in period ÷ Turnover
- COGS
- cost of goods sold in the period
- Opening, Closing
- inventory valued at cost at the start and end
Worked example
- Average inventory = (140,000 + 100,000) ÷ 2 = 120,000.
- Turnover = 600,000 ÷ 120,000 = 5 times.
- Days of inventory = 365 ÷ 5 = 73 days.
Selling $600,000 of goods at cost against $120,000 of average stock is 5 turns a year, or about 73 days of inventory.
What the result means
Higher turnover means stock sells faster and ties up less cash, but too high can mean stock-outs. Compare with your own history and similar retailers, not a universal target.
Assumptions and limits
- Both COGS and inventory are valued at cost.
- A simple average of opening and closing stock represents the period.
- Seasonal businesses should average monthly inventory counts instead of two points.
Questions
Why use COGS rather than sales?
Inventory is held at cost, so dividing sales (at retail) by inventory at cost overstates turnover. If you only have retail values, use sales and inventory both at retail.
What is days of inventory?
Roughly how many days your current stock would last at the period’s rate of sale.