Inventory Turnover Calculator

Inventory turnover is a financial ratio that measures how many times a company sells and replaces its entire inventory during a given period, typically one year. A higher turnover ratio indicates efficient inventory management and strong sales, while a low ratio may signal overstocking or sluggish demand.

The Inventory Turnover Formula

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. COGS is used rather than revenue because it excludes markup, giving a more accurate picture of how efficiently you move products. Average inventory is calculated as (Beginning Inventory + Ending Inventory) / 2.

Days of Inventory on Hand

Days of inventory (also called days inventory outstanding or DIO) converts the turnover ratio into the average number of days it takes to sell your entire stock. The formula is 365 / Turnover Ratio. For example, a turnover of 8x means you sell through inventory roughly every 45 days.

Why Turnover Matters

High turnover means your capital is not tied up in unsold goods. It reduces carrying costs — storage, insurance, depreciation, and obsolescence risk. Low turnover can indicate dead stock that drains working capital and warehouse space. However, turnover that is too high may mean you're understocking and losing sales to stockouts.

How Nventory Helps

Nventory tracks your COGS and inventory values in real time across every warehouse and sales channel. Built-in analytics automatically calculate your turnover ratio, flag slow-moving SKUs, and surface opportunities to optimize purchasing — so you always know where your capital is working hardest and where it is stuck.