Free calculator
Inventory turnover calculator
How many times a year the money in your warehouse turns into sales, how long a unit sits before it does, and how much cash is standing still while it waits.
An inventory turnover calculator divides cost of goods sold by the average stock held at cost, annualises the result, and converts it into the days a unit sits in stock. It is a cash ratio: every turn is the same money earning its margin again.
Your period
Stock at both ends
Averaging the two is the standard convention and is far more honest than using whichever end flatters the ratio.
Inventory turns, annualised
5,25× a year
The average stock of €15.300,00 turned over 1,29 times in 90 days, which is a unit sitting on the shelf for 70 days on average.
Turns in the period
1,29
cost of goods ÷ average stock
Days in stock
70
per unit, on average
Cash tied up
€15.300,00
at any moment
Turnover is a cash question wearing a warehouse costume. Every turn is the same money earning its margin again, so a store turning four times a year needs three times the working capital of one turning twelve to sell the same volume.
See turnover per product, not per storeThe formula
Every turn is the same euro earning its margin again
Turnover looks like a warehouse metric and behaves like a financing one. A store turning its stock four times a year needs three times the working capital of one turning twelve to sell the same volume, because the money spends three times as long standing on a shelf instead of coming back with a margin on it.
Both sides of the ratio have to be at cost. Dividing revenue by stock at cost mixes a retail number with a cost number and inflates the result by your entire gross margin, which is why published turnover figures are so often incomparable between two businesses.
And higher is not automatically better. Very high turns frequently mean stockouts, air freight and orders that never happened, and a sale that could not be made leaves no trace in any report. Turnover is read next to your service level, never maximised on its own.
Line 17 is the cost of goods sold on a nouz P&L, which is the numerator this ratio needs and the one most stores substitute.
Where it goes wrong
Four ways a turnover figure stops meaning anything
This is the most commonly miscalculated ratio in ecommerce, and every error runs in the flattering direction.
Revenue used instead of cost of goods
It is the single commonest version, and it multiplies the ratio by roughly the reciprocal of your cost share: a genuine 1,3 turns becomes 3,4. Comparing that against a competitor who did it properly makes a slow business look fast.
Closing stock instead of the average
Stock on one date is an accident of the delivery calendar. Computed just after a big shipment the ratio looks alarming, and just before one it looks superb, on identical trading.
A quarter quoted as if it were a year
Turns over 90 days are not annual turns, and quoting them interchangeably makes a store look four times slower than it is. Annualise explicitly, and say which you mean whenever the number leaves the building.
One figure for the whole catalogue
A store average hides the two facts you actually need: the fast lines financing everything, and the dead stock quietly consuming the cash. Turnover per product is where the decisions live; the store figure is only a headline.
Worked example
A quarter, at cost on both sides
The calculator’s defaults: €19.800 of goods sold at cost over 90 days, with stock worth €14.500 at the start of the quarter and €16.100 at the end.
Average stock is €15.300, so the quarter turned 1,29 times, which annualises to 5,25 turns and about 70 days on the shelf per unit.
€15.300 is standing still at any given moment to support this trade. Getting to seven annual turns on the same sales would release about €3.800 of it, which is a supplier deposit or a month of ad budget, found without selling anything extra.
The same arithmetic per product usually shows the release is concentrated in a handful of slow lines rather than spread evenly, which is what makes it actionable.
Questions
Inventory turnover, answered
How do I calculate inventory turnover?
Cost of goods sold over a period, divided by the average stock value at cost in that period. Use cost on both sides: dividing revenue by stock at cost mixes retail and cost bases and inflates the ratio by your whole gross margin, which is why published turnover figures are so often incomparable.
What is a good inventory turnover?
It varies enormously by category, so the useful comparison is with your own history and with the cash it frees. Moving from four turns a year to six on the same sales releases a third of the money standing in the warehouse, and that is a bigger, safer win than most marketing changes.
Should I use average stock or closing stock?
Average, taken from the value at both ends of the period. Closing stock alone is whatever the warehouse happened to hold on one date, which is why a ratio computed just after a big delivery looks terrible and one computed just before it looks excellent.
How does turnover relate to days in stock?
They are the same fact in two units: days in stock is the period divided by the turns. Four turns a year is about 91 days on the shelf; twelve turns is 30. Days is usually the more useful phrasing because it can be compared directly with supplier lead times and payment terms.
Can turnover be too high?
Yes. Very high turns often mean stockouts, rushed freight and lost orders you never see in the data, because a sale that could not be made leaves no record. Turnover is a cash efficiency measure, and it has to be read next to your service level rather than maximised on its own.
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The terms this calculator uses:
Turnover per product, not one number for the warehouse
nouz values stock at the cost effective on each order's own date and tracks what actually sold, so the slow lines that are quietly financing nothing are visible by name.