Inventory Turnover Calculator
Work out inventory turnover from cost of goods sold and average inventory, with days on hand and a check against your own target. Use a year, a quarter, a month or any number of days, in dollars or in units, and every result shows the working.
Your numbers
From the income statement, or from the COGS calculator. Cost, not sales: inventory is carried at cost.
Both at cost. Leave one empty and the other is used alone.
Your own goal, or one agreed with a customer or supplier. Shows the stock it needs.
Only to compare: shows what a sales-based ratio would say.
Inventory turnover
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- Days of inventory on hand
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- Average inventory
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Use the same period for both figures, and the same basis (cost) for both. The result is an average across everything in the figure: fast and slow items hide each other.
The calculation runs in your browser and ParrotNotes does not store your numbers. They sit in the page address so you can bookmark or share the result.
The inventory turnover formula
Inventory turnover = cost of goods sold ÷ average inventory. Average inventory = (beginning inventory + ending inventory) ÷ 2. The answer is a count: how many times the stock you hold was sold and replaced in the period.
Example for a year: cost of goods sold of $1,200,000, $180,000 of inventory on January 1 and $220,000 on December 31. Average inventory is $200,000 and turnover is $1,200,000 ÷ $200,000 = 6 times. Days of inventory on hand = 365 ÷ 6 = 60.8 days: an item waits about two months before it sells.
If you keep monthly balances, use their average instead of the start and the end. Two dates can mislead when a big delivery lands just before the year-end count.
Cost of goods sold or sales: why it matters
Inventory sits on the balance sheet at what you paid for it. Cost of goods sold is at the same cost, so the two divide cleanly. Sales include your margin, so sales ÷ inventory measures a mix of turnover and markup, and it comes out higher. AccountingCoach makes the same point: people who use sales overstate the ratio.
In the example, net sales of $1,600,000 against $200,000 of stock would give 8 turns, against 6 at cost. The gap grows with the margin: a 50% gross margin doubles the figure. You will still meet sales-based ratios, in some data services and in quick calculations; when you compare two figures, check that both use the same top line.
Quarters, months and a yearly target
Turnover is per period, so a quarter gives a smaller number than a year. Example for a quarter of 90 days: cost of goods sold of $270,000, inventory of $55,000 at the start and $65,000 at the end. Average $60,000, turnover 4.5 for the quarter, days on hand 90 ÷ 4.5 = 20. At a yearly rate that is 4.5 × 365 ÷ 90 = 18.25 turns.
Targets are usually set per year, so the calculator compares the yearly rate with your target. The stock a target needs = cost of goods sold a year ÷ target. In the quarter example, $1,095,000 a year ÷ 24 turns = $45,625 of average inventory, so reaching 24 turns frees $14,375 of cash now held as stock. A lower target works in reverse and shows the extra stock it needs.
Turnover in units for one product
For one item or a line of similar items, units are often quicker than dollars and avoid price changes during the year. Switch to Units and enter units sold and units on hand. Example: 4,800 units sold in a year, 900 on hand at the start and 700 at the end. Average 800, turnover 4,800 ÷ 800 = 6 times, 60.8 days on hand.
Do not add up units of different products: a pallet of bolts and a single motor are not the same unit. Use dollars at cost for a mix.
Turnover, days sales in inventory and EOQ
This page starts from turnover: the ratio, a yearly target and the stock that target needs. The days sales in inventory calculator starts from days and links them to the cash conversion cycle. The EOQ calculator works one level down, on the order size for one item: smaller, more frequent orders lower the average stock you carry, which is how turnover goes up without selling more.
The COGS calculator gives the cost of goods sold figure this page needs, from beginning inventory, purchases and ending inventory.
For distributor and manufacturers' rep conversations
A distributor's buyer pays for the stock on the shelf, so turns come up whenever a line is reviewed or a stocking program is proposed. Run the customer's own numbers before the meeting: what the line turns today, and how much stock a faster target would free. Talking about their cash, not your price, tends to keep a line review on the facts.
Turnover is an average across everything in the figure. A few fast movers can hide slow ones, so look at the lines separately when the total looks fine but the warehouse does not.
Sources, each read on 2026-11-06. Results are arithmetic on your own numbers, not accounting advice:
- Wall Street Prep, Inventory turnover: COGS ÷ average inventory, average = (beginning + ending) ÷ 2, days = 365 ÷ turnover
- AccountingCoach, Definition of inventory turnover ratio: cost of goods sold, not sales, because inventory is reported at cost
Related: the days sales in inventory calculator for days and the cash cycle, the EOQ calculator for the order size of one item, and the COGS calculator for the cost of goods sold figure.
More for distributor and manufacturing sales: Distributor sales, Vendor managed inventory, Industrial distributor.
The ratio opens the stocking talk
Turns show what a line ties up; the review with the buyer decides what changes. Record that conversation in ParrotNotes and you get a transcript, a summary and the action items, so what was agreed is written down.
Get Started FreeRelated tools
- Days Sales in Inventory CalculatorWork out days sales in inventory (DSI) from average inventory and cost of goods sold, with inventory turnover for the same period.Open the tool
- EOQ CalculatorWork out the economic order quantity from yearly demand, order cost and holding cost, with orders per year, the reorder point, safety stock and total cost.Open the tool
- COGS CalculatorWork out cost of goods sold from beginning inventory, purchases and ending inventory, with gross profit, gross margin and inventory turnover.Open the tool