Inventory Turnover Calculator
How many times your stock sells through in a year — and how many days of stock you hold
Updated 2026-09-09
- Turns per year
- 4.80
- Days of stock on hand
- 76 days
- Cash tied up in stock
- $25,000.00
Higher turns mean the same cash works harder. Grocery runs high, furniture and jewellery run low — compare against your own history first.
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Stock is cash wearing a different hat. Turnover tells you how hard that cash is working: two turns a year means every dollar of stock earns its margin twice, twelve turns means twelve times. This calculator gives you the ratio and the days-of-stock figure behind it.
How turnover is calculated
Divide the cost of goods sold across twelve months by the average value of stock you held during that period. $120,000 of goods sold against $25,000 of average stock is 4.8 turns a year.
Days of stock on hand is 365 divided by the turns — 4.8 turns is roughly 76 days of cover. Owners often find the days figure easier to act on, because it maps directly onto supplier lead times.
Getting the two inputs right
The ratio is only as honest as its inputs, and both are commonly wrong.
- Use cost of goods sold, not revenue — revenue includes your margin and inflates the ratio
- Average the stock value across the year, not a single count taken at your quietest moment
- Value stock at cost, including inbound freight
- Exclude stock you have written off but never removed from the system
- Calculate by category as well as overall — a blended figure hides the dead lines
What a good number looks like
There is no universal target; the useful comparison is your own trend and your own categories. Fast-moving food and convenience lines turn many times a year by necessity. General retail commonly lands in the mid single digits. Furniture, jewellery, and specialist equipment turn slowly by nature and price accordingly.
Falling turns with flat sales means stock is building up. Rising turns with rising stockouts means you have cut too deep. The reorder point calculator is the other half of that balance.
Practical ways to raise turnover
Most of the gain comes from the tail of the range rather than the bestsellers.
- Rank every SKU by turns and clear the bottom decile deliberately, once a quarter
- Order smaller quantities more often where the supplier allows it
- Set low-stock alerts instead of eyeballing shelves
- Move slow lines into bundles with fast ones rather than discounting them alone
- Count regularly with a barcode scan so the numbers you plan from are real
Where turnover misleads
A high ratio achieved by running empty shelves costs you sales you never see. Turnover reads best next to two other numbers: your stockout rate and your gross margin. Improving turns while holding margin and service level steady is a real gain; improving it by starving the shop is not.
Keep the numbers in a spreadsheet
Ready-made Excel and Google Sheets templates that pick up where this calculator stops. One-off purchase, instant download.
Inventory Tracker & Stock Control Spreadsheet
150 SKUs, stock in/out log, automatic on-hand counts, reorder alerts, a reorder list and a dashboard.
Simple Profit & Loss (P&L) Statement Spreadsheet
Log transactions; get a monthly and yearly P&L with margins.
Frequently asked questions
Should I use sales or cost of goods sold?
Cost of goods sold. Using revenue mixes your margin into the ratio and makes turnover look better than it is.
How do I find average stock value?
Average the opening and closing stock values for the period, or better, average your monthly counts across the year.
What is a good inventory turnover ratio?
It depends entirely on the category — perishables turn dozens of times a year, big-ticket goods a handful. Compare against your own history and category peers.
Can turnover be too high?
Yes. Very high turns often mean frequent stockouts and lost sales. Read it alongside how often customers ask for something you do not have.
Related reading
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