Inventory Turnover Calculator
Calculate your inventory turnover ratio and days in inventory. Understand how efficiently you're managing stock and identify opportunities to improve cash flow.
Inventory Data
Total cost of products sold during the period
Inventory value at period start
Inventory value at period end
Enter inventory data to calculate turnover.
Industry Turnover Benchmarks
| Industry | Turnover | Days in Inventory |
|---|---|---|
| Grocery/Supermarket | 14-20x | 18-26 days |
| Fast Fashion | 8-12x | 30-45 days |
| Consumer Electronics | 6-10x | 36-60 days |
| General Retail | 4-6x | 60-90 days |
| Furniture | 3-5x | 73-120 days |
| Jewelry | 1-2x | 180-365 days |
Improving Inventory Turnover
High Turnover Benefits
Better cash flow, lower holding costs, reduced obsolescence risk, and fresher inventory. Aim to balance against stockout risk.
Low Turnover Risks
Tied-up capital, storage costs, potential markdowns, and obsolete stock. Analyze slow-moving SKUs and consider clearance strategies.
Optimization Strategies
Implement demand forecasting, optimize reorder points, use ABC analysis to prioritize fast movers, and consider dropshipping for slow sellers.
Balance is Key
Too high turnover may mean stockouts and lost sales. Find the sweet spot where you minimize holding costs while maintaining adequate stock levels.
Frequently Asked Questions
What is inventory turnover ratio?
Inventory turnover ratio measures how many times you sell and replace inventory in a period. A ratio of 6 means you sold through your entire inventory 6 times that year. Higher turnover typically indicates efficient inventory management and strong sales.
How do I calculate inventory turnover?
Inventory Turnover = Cost of Goods Sold / Average Inventory. Average inventory = (Beginning Inventory + Ending Inventory) / 2. For example, $500,000 COGS with $100,000 average inventory = 5x turnover.
What is a good inventory turnover ratio?
Good turnover varies by industry. Fashion: 4-6x, groceries: 14-20x, furniture: 2-4x, electronics: 6-8x. Generally, higher is better, but too high may indicate lost sales from stockouts. Compare to industry benchmarks.
What is days in inventory (DII)?
Days in inventory = 365 / Inventory Turnover. It shows how long items sit before selling. If turnover is 6, DII = 365/6 = 61 days. Lower DII means faster sales and less cash tied up in inventory.
How can I improve inventory turnover?
Strategies include: better demand forecasting, reducing slow-moving SKUs, running promotions on stale inventory, optimizing reorder points, implementing just-in-time inventory, and negotiating smaller/more frequent supplier shipments.
