FreightMaths› Warehousing & Fulfillment› Inventory Turnover Ratio Calculator

Inventory Turnover Ratio Calculator — Stock Efficiency Metric

Calculate your inventory turnover ratio and days of inventory on hand. Identify slow-moving stock, optimize reorder points and free up working capital.

Quick answer: Inventory Turnover = COGS ÷ Average Inventory. Days in Inventory = 365 ÷ Turnover. Higher turnover = leaner, more efficient inventory management.

🔄 Inventory Turnover Ratio Calculator

Cost of goods sold for the period
(Opening + Closing) ÷ 2
Typical: 20–30% (storage, insurance, obsolescence)
Inventory Turnover
—
Days in Stock
—
Annual Holding Cost
—

How to Use This Calculator

  1. Enter annual COGS — cost of goods sold — not revenue. Use your income statement.
  2. Calculate average inventory — add opening and closing inventory values and divide by 2.
  3. Review turnover — compare to industry benchmarks. Grocery: 20–30x. Industrial: 3–6x. Fashion: 4–8x.

Worked Example

A distributor has $2,400,000 COGS and average inventory of $400,000.

  1. Turnover: $2,400,000 ÷ $400,000 = 6.0x
  2. Days in stock: 365 ÷ 6 = 60.8 days
  3. Holding cost: $400,000 × 25% = $100,000/year

Improving turnover from 6x to 8x by reducing average inventory to $300,000 would save $25,000/year in holding costs and free up $100,000 in working capital.

Frequently Asked Questions

Benchmarks vary by industry. Food/grocery: 15–30x. Automotive parts: 5–10x. Industrial distribution: 4–8x. Electronics: 8–15x. Fashion: 4–6x. Compare to your industry peers, not a universal standard.

Overstocking, poor demand forecasting, slow-moving SKUs, seasonal products held too long, minimum order quantities forcing excess buys, and supply chain disruption buffer stock. Address root causes rather than just reducing safety stock.