Inventory Turnover Calculator

Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory Value, for the same period. Average inventory is typically (Opening Inventory + Closing Inventory) ÷ 2.

It varies widely by category — perishables and fast fashion turn over much faster than furniture or electronics. Compare your ratio against your own historical trend and category benchmarks rather than a single universal number.

It's the turnover ratio converted into days — roughly how many days of sales your current average inventory represents. It's calculated as 365 ÷ Inventory Turnover Ratio, and a rising number signals stock is moving more slowly than before.

Common causes are overstocking ahead of demand, slow-moving SKUs accumulating, seasonal demand dips, or pricing that's no longer competitive enough to move stock at the previous pace.

Use cost of goods sold. Inventory is valued at cost, so dividing sales by it mixes two bases and inflates the ratio by your margin. A store with ₹1,50,000 average stock, ₹4,50,000 cost of goods sold and ₹6,30,000 sales shows 3x on cost but 4.2x on sales. If you have to use sales because COGS is not available, use sales in every period so the results still compare.

Enter the month's cost of goods sold, the average stock value for that month, and 30 (or the actual number of days) in the days in period field. The ratio is per month, so if sales and stock levels stay similar all year, a monthly turnover of 1x works out to about 12x a year. Days inventory outstanding is always in days, so you can compare it across periods of different lengths.

For a trading business, cost of goods sold is opening stock, plus purchases during the period, plus direct costs such as freight inward, minus closing stock. Value everything at cost, excluding GST you claim as input tax credit. You can usually get these figures from your accountant's trading account or the stock reports in your accounting software.

Order slow-moving items in smaller quantities more often, stop reordering items that have not sold in months, and clear dead stock with markdowns or bundles. Rank items by the stock value you hold so you deal first with the ones that tie up the most cash. Recalculate each month to see whether the changes are working.