Inventory Turnover Calculator
Measure how efficiently your stock sells. Enter your cost of goods sold and average inventory to get the turnover ratio and days sales of inventory (DSI), plus a plain-language interpretation and an optional period-to-period comparison.
Compare two periods (optional)
Enter a second period to see whether turnover is improving or slowing down.
| Metric | Period 1 | Period 2 | Change |
|---|---|---|---|
| Turnover ratio | — | — | — |
| DSI (days) | — | — | — |
How to read the result
- High turnover (low DSI): stock sells quickly, less cash is locked up, and there is lower risk of dead or expired stock. But very high turnover can also mean you under-stock and miss sales.
- Low turnover (high DSI): cash sits on shelves. Common causes are over-ordering, slow-selling lines, or seasonal stock. Consider discounts, bundles, or smaller reorder quantities.
- Always compare against your own past periods and similar businesses. A DSI of 20 days is normal for groceries but very fast for furniture.
Why inventory turnover matters
Inventory is cash sitting on a shelf. The turnover ratio = cost of goods sold ÷ average inventory. It tells you how many times you completely sold and restocked your inventory in the period.
Days sales of inventory (DSI) = period days ÷ turnover ratio. It answers: on average, how many days does one item wait before it is sold? A DSI of 45 means the typical item sits in your store or warehouse for 45 days.
- Cash flow: faster turnover frees cash for rent, salaries, and new stock.
- Storage cost: slow stock costs you warehouse space, insurance, and handling.
- Spoilage and obsolescence: food, fashion, and electronics lose value fast if they sit.
- Buying decisions: the metric shows which product lines to reorder more of and which to cut.
Use cost of goods sold (not revenue) on top of the ratio, and use average inventory (not just closing stock) on the bottom, so one unusual month-end does not distort the picture.
Frequently asked questions
What is a good inventory turnover ratio?
It depends on the trade. Grocery and fast-moving goods often turn 12 or more times a year, general retail around 4 to 8, and manufacturing or furniture may be fine at 2 to 4. Compare against your own history and similar businesses.
Should I use COGS or revenue in the formula?
Use cost of goods sold. Revenue includes your markup, which inflates the ratio and hides slow-moving stock.
What does a falling turnover ratio mean?
It usually means stock is moving slower: over-ordering, weaker demand, or dead lines accumulating. Review which products are not selling and consider discounts or smaller reorders.