What is the inventory turnover formula?

Inventory turnover = cost of goods sold ÷ average inventory, where average inventory = (beginning + ending inventory) ÷ 2.

How do I convert inventory turnover to days?

Days in inventory = 365 ÷ inventory turnover (or the number of days in your period).

Why use COGS instead of sales?

Inventory is valued at cost, so dividing cost by cost gives a consistent ratio.

What is a good inventory turnover ratio?

It depends on the product: fast-moving consumer goods turn over much faster than durable goods.

Inventory Turnover Ratio Formula

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Inventory Turnover Ratio Calculator

Inventory turnover counts how many times a business sells and replaces its stock during a period. It divides cost of goods sold by average inventory. Cost of goods sold is used rather than revenue because inventory is carried at cost, so both sides of the ratio are measured the same way.

Formula

Inventory turnover = Cost of goods soldAverage inventory Days in inventory = Days in periodInventory turnover

Where

Cost of goods sold: cost of the goods sold during the period
Average inventory: (beginning + ending inventory) ÷ 2

Calculator

Cost of goods sold

Inventory, beginning

Inventory, end

Days in the period

Result and step-by-step solution

Inventory turnover

6×

Inventory is sold and replaced 6 times a period: about every 60.8 days.

Average inventory
45,000.00 + 55,000.002 = 50,000.00
Divide COGS by it
300,000.0050,000.00 = 6
Days in inventory
3656 = 60.83 days

How to use the formula

Turning the ratio around gives days in inventory, the average number of days stock sits before being sold: days in the period ÷ turnover. High turnover means lean stock and fresh goods, but if it is too high the business may be running out of stock and losing sales. Low turnover ties up cash, raises storage costs and increases the risk of obsolete or spoiled goods.

With COGS of 300,000 and inventory of 45,000 at the start and 55,000 at the end of the year, average inventory is 50,000 and turnover is 6.0, so stock is replaced about every 60.8 days. Grocers turn inventory 12 or more times a year; furniture and jewellery sellers only 2 or 3 times. Days in inventory is one of the three parts of the cash conversion cycle; see also days inventory outstanding.

Frequently asked questions

What is the inventory turnover formula?: Inventory turnover = cost of goods sold ÷ average inventory, where average inventory = (beginning + ending inventory) ÷ 2.
How do I convert inventory turnover to days?: Days in inventory = 365 ÷ inventory turnover (or the number of days in your period).
Why use COGS instead of sales?: Inventory is valued at cost, so dividing cost by cost gives a consistent ratio.
What is a good inventory turnover ratio?: It depends on the product: fast-moving consumer goods turn over much faster than durable goods.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.