Cernarus

Inventory Turnover Calculator

This calculator computes the inventory turnover ratio, the average inventory during the period, and the average days in inventory using Cost of Goods Sold (COGS) and beginning/ending inventory values. Inventory turnover measures how many times inventory is sold and replaced during a period — a core efficiency metric for retailers, manufacturers, and distributors.

Use consistent accounting bases (e.g., same inventory valuation method and time period) when entering COGS and inventory values. Differences in valuation method (FIFO, LIFO, average cost) or significant seasonality can change interpretations. For guidance on financial reporting practices, consult authoritative sources such as the U.S. Securities and Exchange Commission and institutional accounting materials.

Updated Nov 15, 2025

Inputs

Results

Updates as you type

Average Inventory

$55,000.00

Inventory Turnover Ratio

1.8182

Average Days in Inventory

200.75

OutputValueUnit
Average Inventory$55,000.00currency
Inventory Turnover Ratio1.8182—
Average Days in Inventory200.75days
Primary result$55,000.00

Visualization

Methodology

We compute Average Inventory as the arithmetic mean of beginning and ending inventory: (Beginning Inventory + Ending Inventory) / 2. This is the standard rolling-average approach used in financial analysis and teaching materials.

Inventory Turnover Ratio = COGS / Average Inventory. A higher ratio indicates inventory is turning over more frequently; a lower ratio suggests slower sales, potential obsolescence, or overstocking.

Average Days in Inventory = Period length (days) / Inventory Turnover. This converts turnover into a time-based measure: how many days, on average, inventory remains on hand before sale.

Practical note: if inventory fluctuates widely through the period, consider using a multi-point average (monthly balances) or the period-weighted average to reduce volatility in the metric. Also reconcile COGS to the same period as the inventory balances.

Further resources

Expert Q&A

What inputs do I need?

Enter the period's Cost of Goods Sold (COGS) and the beginning and ending inventory values for the same period. Period length (days) defaults to 365 but can be adjusted for quarterly or monthly analysis.

What does a high or low inventory turnover mean?

A higher turnover generally indicates strong sales or efficient inventory management; very high turnover can signal stockouts and lost sales. Low turnover can indicate overstocking or slow-moving items. Benchmarks vary widely by industry—compare to sector peers when possible.

How do accounting methods affect the result?

Inventory valuation methods (FIFO, LIFO, weighted average) and how COGS is calculated will change both COGS and inventory balances, affecting the ratio. For cross-company comparisons, ensure consistent accounting policies.

What if my inventory fluctuates seasonally?

For seasonal businesses, a two-point average (beginning and ending) may misstate typical inventory. Use multi-point averages (monthly snapshots) or compute the metric on shorter comparable periods (quarter-over-quarter) to account for seasonality.

Can this calculator handle negative or zero values?

COGS and inventory values should be non-negative. Zero or near-zero average inventory will produce extremely large or undefined turnover values; interpret results carefully and verify inputs for correctness.

Are there standard benchmarks?

Benchmarks depend on industry and business model. Retail and perishable goods commonly have higher turnover than heavy manufacturing. Use industry reports or regulatory filings for peer comparisons; governmental and academic publications provide sector-level references.

Sources & citations