Inventory Turnover Calculator

How to calculate Inventory Turnover?

The inventory turnover ratio is calculated using a simple formula:

Inventory Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory

This indicates the number of times your inventory is sold within a specific time frame. The higher the turnover, the faster your goods are moving. To make it easier, you can use our inventory turnover formula calculator or average inventory turnover calculator to instantly get results without manual computation.

To make inventory turnover calculation even easier, try our Enerpize Inventory Turnover Template, a ready-to-use tool that tracks performance across multiple years.

How to use the Inventory Turnover Calculator?

Our inventory turnover calculator online is designed to provide you with instant results. Here’s how to use it:

Step 1: Enter your Cost of Goods Sold (COGS)

Input your total cost of goods sold over the chosen period (monthly, quarterly, or annually).

Step 2: Enter your Beginning and Ending Inventory

The calculator will automatically compute the average inventory.

Step 3: Get your Inventory Turnover Ratio

With just one click, the rate of inventory turnover calculator gives you the turnover ratio.

Step 4: View Days Inventory Outstanding (DIO)

The calculator also provides the Days Inventory Outstanding (DIO) — the average number of days your stock remains unsold. This is a vital metric for inventory management.

Whether you need a monthly inventory turnover ratio calculator or a general inventory turnover rate calculator, our tool is designed to adapt to your specific needs.

Examples of calculating Inventory Turnover

Example 1: Sarah’s Boutique

Sarah runs a small clothing boutique. Over the year, her COGS was $200,000, and her average inventory was $50,000.

Using the inventory turnover calculator, Sarah finds:

• Inventory Turnover = $200,000 ÷ $50,000 = 4

  This means Sarah sold and restocked her inventory four times during the year. The DIO result shows her clothes stayed in stock for around 90 days before being sold.

   

Example 2: David’s Electronics Store

David owns an electronics store. His COGS for the quarter is $150,000, and his average inventory is $75,000.

With the inventory turnover ratio calculator, he gets:

• Inventory Turnover = $150,000 ÷ $75,000 = 2

  This means his inventory turns over twice in three months, with a DIO of about 45 days. David realizes he might need to adjust stock levels to improve efficiency.
   

  These real-life examples show how the rate of inventory turnover calculator can help businesses identify opportunities for improvement.

Disclaimer

This inventory turnover calculator and inventory turnover formula calculator are provided for informational purposes only. Results are based on the data you input and should not be considered financial or business advice. Always consult a professional advisor before making significant inventory or financial decisions.

FAQs

What is the formula for turnover?

The inventory turnover formula is:

Inventory Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory.

What is the formula for inventory turnover in 365?

To express inventory turnover in terms of days, you use the Days Inventory Outstanding (DIO) formula:

Days Inventory Outstanding (DIO) = 365 ÷ Inventory Turnover.

What is the easiest way to calculate turnover rate?

The easiest method is to use an Inventory Turnover Calculator instead of manual calculation.

How to calculate inventory as a percentage of sales?

You can calculate inventory as a percentage of sales using the formula:

Inventory % of Sales = (Average Inventory ÷ Net Sales) × 100

How do you calculate the inventory turnover for the current year?

To find the inventory turnover for the current year, apply the formula:

Inventory Turnover = COGS for the year ÷ Average Inventory for the year.

Is 0.5 a good inventory turnover ratio?

No, 0.5 is very low. It means the company sells its inventory less than once a year, leaving stock sitting for over 2 years.

What does an inventory turnover ratio of 1.5 mean?

It means inventory is sold and replenished 1.5 times per year (about every 243 days).

What two values are used to calculate inventory turnover?

The two key values used in the inventory turnover calculation are:

• Cost of Goods Sold (COGS)
• Average Inventory

How to calculate inventory turns without COGS?

If COGS data is not available, use Net Sales ÷ Average Inventory as an alternative; however, COGS provides a more accurate measure.