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Inventory Turnover Calculator

Calculate your inventory turnover ratio and Days Inventory Outstanding (DIO). Compare against retail, e-commerce, and manufacturing benchmarks to see how efficiently you manage stock.

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Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2. If you only have one figure, use that as the average.

Inventory Turnover Formula

Inventory Turnover = COGS ÷ Average Inventory
Days Inventory Outstanding (DIO) = 365 ÷ Inventory Turnover
Average Inventory = (Beginning + Ending Inventory) ÷ 2

How to Use This Calculator

  1. 1
    Enter Annual COGS
    Find your annual Cost of Goods Sold on your income statement. This is the direct cost of products sold, not including operating expenses.
  2. 2
    Calculate Average Inventory
    Add your beginning and ending inventory values and divide by 2. This smooths out seasonal fluctuations in stock levels.
  3. 3
    Read the Results
    A higher turnover ratio is generally better — it means you are selling through stock quickly. DIO tells you how many days your stock sits before being sold.
  4. 4
    Compare to Benchmarks
    Use the benchmark table to see how your turnover compares to your industry. Significantly below benchmark may indicate overstocking or slow-moving items.

Frequently Asked Questions

A good ratio depends on your industry. Grocery and fast-moving consumer goods turn 20–30x per year. Fashion and apparel averages 4–6x. Furniture may only turn 2–4x. A ratio above your industry average typically indicates efficient inventory management.

DIO (also called Days Sales of Inventory or DSI) measures how many days, on average, your inventory sits before being sold. Lower DIO means faster-moving stock and better cash flow. DIO = 365 ÷ Inventory Turnover Ratio.

Low turnover can indicate overstocking, poor demand forecasting, slow-moving or obsolete products, or pricing issues. It ties up cash in inventory and increases carrying costs (storage, insurance, obsolescence).

Yes. An extremely high turnover may mean you are understocking and missing sales due to stockouts. The optimal ratio balances avoiding excess stock while maintaining enough inventory to fulfil orders without delays.

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