Inventory Turnover Calculator
Calculate inventory turnover (COGS / Average Inventory) and days to sell (DSI).
Benchmark against industry averages to identify overstocking or understocking.
Inventory Turnover Ratio measures how many times a company sells and replaces its entire inventory within a given period. It is one of the most critical efficiency metrics in retail, manufacturing, and wholesale operations.
Primary formula: Inventory Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2
Alternative formula (less preferred — uses revenue, not cost): Inventory Turnover = Net Sales ÷ Average Inventory
The COGS-based version is more accurate because it compares inventory at cost to the cost of what was sold — no markup distortion.
Days Inventory Outstanding (DIO): DIO = 365 ÷ Inventory Turnover
DIO shows how many days of inventory are on hand on average. Lower DIO = faster-moving stock.
What each variable means:
- COGS = total cost of products sold during the period (from the income statement)
- Beginning Inventory = inventory value at the start of the period
- Ending Inventory = inventory value at the end of the period
Industry benchmarks:
| Industry | Typical Turnover | DIO |
|---|---|---|
| Grocery / Supermarket | 15–25× | 15–24 days |
| Fast fashion retail | 4–6× | 60–90 days |
| Auto manufacturing | 8–12× | 30–45 days |
| Jewelry | 1–2× | 180–365 days |
| Electronics retail | 5–8× | 45–73 days |
Worked example: COGS = $2,400,000. Beginning inventory = $300,000. Ending inventory = $500,000. Average inventory = ($300,000 + $500,000) / 2 = $400,000 Turnover = $2,400,000 / $400,000 = 6.0× DIO = 365 / 6.0 = ~61 days
A turnover below the industry benchmark suggests overstocking, obsolescence risk, or slow sales. A turnover too high may mean stockouts and lost sales.