Inventory Turnover Calculator
Inventory turnover tells you how fast you sell what you buy. Low turnover means cash is stuck on shelves; high turnover means lean, efficient operations. This computes the ratio and days on hand.
Formula: inventory turnover = cost of goods sold ÷ average inventory (typically (beginning + ending inventory) ÷ 2). Days on hand: 365 ÷ turnover — how many days of sales your current stock covers. Interpretation: grocery/pharmacy turn 12-20×, retail/wholesale 4-10×, luxury/specialty 1-3×. Too high isn't always good: very high turnover can mean stockouts and lost sales. The right number is industry- and product-specific.
FAQ
What is a good inventory turnover ratio?
It depends on industry: grocery runs 12-20×, general retail 4-10×, and specialty/luxury 1-3×. Compare to your category rather than an absolute number.
How do I improve inventory turnover?
Cut slow movers, tighten reorder points, run promotions on dead stock, and improve demand forecasting. Each point of turnover frees cash from shelves.
What does high turnover mean?
You sell inventory quickly — good cash flow and lean stock. But if it's too high, you may be stocking out and losing sales; balance turnover against service levels.
Figures are editable example defaults for modeling, not quotes or advice. Financial, tax, and medical outcomes vary with your situation — verify with a qualified professional (CFP, CPA, tax advisor, or veterinarian).