How to calculate inventory turnover
Compare COGS with the stock you hold.
Enter COGS
Use the cost of goods sold for the same period as the inventory balances.
Add opening and closing stock
Use consistent valuation, such as cost rather than retail price.
Match the period
Enter the number of days covered so the days-on-hand figure is meaningful.
What does this tool do?
Inventory turnover compares the cost of goods sold with the average stock held. A higher ratio means stock moves quickly; a lower ratio ties up cash and raises holding costs. Days inventory outstanding converts the ratio into an easier daily measure.
The Formula
Turnover = COGS ÷ Average inventory; Days on hand = Period days ÷ TurnoverFrequently Asked Questions
Is high inventory turnover always better?
Usually, but not at the cost of stockouts. Very high turnover can mean too little buffer for demand variability or missed bulk purchasing discounts.
Why use average inventory instead of closing inventory?
Closing stock is a single snapshot that may be unusually high or low. Averaging opening and closing smooths seasonal or timing effects.