Inventory Turnover Calculator
Calculate inventory turnover ratio and inventory days to analyze operational efficiency
Calculate Inventory Efficiency
Total cost of goods sold during the period
Inventory value at the start of the period
Inventory value at the end of the period
Time period for analysis
Inventory Turnover Results
Efficiency Analysis
Example Calculation
Retail Company Example
Cost of Goods Sold: $1,200,000
Beginning Inventory: $150,000
Ending Inventory: $200,000
Analysis Period: 365 days
Calculation
Average Inventory = ($150,000 + $200,000) ÷ 2 = $175,000
Inventory Turnover = $1,200,000 ÷ $175,000 = 6.86x
Inventory Days = 365 ÷ 6.86 = 53.2 days
Result: Good efficiency for retail business
Industry Benchmarks
Retail (Grocery)
18-30 days inventory
Retail (Clothing)
60-90 days inventory
Manufacturing
30-60 days inventory
Technology
24-45 days inventory
Analysis Tips
Higher turnover generally indicates better efficiency
Compare with industry benchmarks for context
Track trends over multiple periods
Consider seasonal variations in analysis
Understanding Inventory Turnover
What is Inventory Turnover?
Inventory turnover is a financial efficiency ratio that measures how many times a company sells and replaces its inventory during a specific period. It indicates how efficiently a company manages its inventory and converts it into sales.
Why is it Important?
- •Measures operational efficiency and inventory management
- •Indicates cash flow quality and working capital efficiency
- •Helps identify potential inventory problems early
- •Enables comparison with industry benchmarks
Formula Explanation
Inventory Turnover = COGS ÷ Average Inventory
Inventory Days = Period Days ÷ Inventory Turnover
- COGS: Cost of Goods Sold during the period
- Average Inventory: (Beginning + Ending) ÷ 2
- Inventory Days: Time to sell average inventory
- Higher Turnover: Better efficiency and cash flow
Note: Industry averages vary significantly. Compare with similar companies for meaningful analysis.