Inventory Turnover Calculator
Calculate your inventory turnover ratio and days of inventory on hand from COGS and average inventory, with benchmarks for what a healthy ratio looks like.
Use COGS, not revenue — turnover measures cost against cost.
Healthy for most ecommerce — inventory converts to cash several times a year.
Turnover = COGS ÷ average inventory; days on hand = 365 ÷ turnover. Pair with the sell-through rate for a per-period view and the EOQ calculator to fix over-ordering.
Frequently asked questions
How do I calculate the inventory turnover ratio?
Divide annual cost of goods sold by average inventory value: turnover = COGS ÷ ((beginning + ending inventory) ÷ 2). $240,000 of COGS on $40,000 average inventory is a turnover of 6 — you sold through your stock six times that year.
What is a good inventory turnover ratio?
Most ecommerce and general retail sits comfortably between 4 and 8 turns per year. Grocery and fast fashion run 12+; furniture and luxury goods can be healthy at 2–4. Compare against your own category and margin structure, not a universal number.
Why use COGS instead of revenue?
Inventory is carried at cost, so dividing revenue by cost-based inventory inflates the ratio by your markup and makes comparisons meaningless. Some retailers quote a sales-based ratio — fine internally, but be consistent.
What are days of inventory on hand?
The same metric expressed in time: 365 ÷ turnover. A turnover of 6 means about 61 days of inventory — the average unit sits two months before selling. It ties directly to cash flow: fewer days on hand means capital freed for growth.