Inventory Turnover Calculator
Calculate inventory turnover ratio, days sales of inventory (DSI), and assess efficiency.
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How to use this calculator
Average inventory is the mean of beginning and ending inventory. Dividing COGS by average inventory shows how many times stock was cycled in the period. DSI converts this to the average number of days inventory is held.
- 1
Enter your cost of goods sold (COGS) for the period (typically annual).
- 2
Enter your beginning and ending inventory values for the same period.
- 3
Read the inventory turnover ratio, DSI, and efficiency assessment.
Frequently asked questions
What is a good inventory turnover ratio?
It varies significantly by industry. Grocery stores may turn inventory 20+ times per year while furniture retailers may turn 4–6 times. Generally, higher turnover indicates better efficiency, but excessively high turnover may signal stockout risk.
Why is COGS used instead of revenue?
Inventory is recorded at cost, not selling price. Using COGS ensures a like-for-like comparison. Using revenue would inflate the ratio by the profit margin.
What is Days Sales of Inventory (DSI)?
DSI is the average number of days it takes to sell through your entire inventory. A lower DSI means inventory moves quickly; a higher DSI indicates slower sales or overstocking.
Inventory Turnover Calculator — DSI & Efficiency Analysis
Why inventory turnover is a critical business metric
Excess inventory ties up working capital, increases storage costs, and raises the risk of obsolescence. Low turnover is a warning sign of weak demand or over-purchasing. High turnover signals efficient operations but can also indicate stock shortages that lead to lost sales. Monitoring this ratio helps businesses optimize purchasing decisions.
How to improve your inventory turnover ratio
Strategies include improving demand forecasting to buy closer to actual need, running promotions on slow-moving stock, negotiating just-in-time delivery with suppliers, and discontinuing poor-performing SKUs. Even modest improvements in turnover ratio can significantly reduce working capital requirements and improve cash flow.
Learn more from an authoritative source:
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →