Inventory Turnover Ratio Calculator
Measures how many times inventory is sold and replaced over a period
Total cost of goods sold during the period
Inventory value at the start of the period
Inventory value at the end of the period
Enter beginning and ending inventory to calculate average
How many times inventory is sold and replaced per period
Average number of days to sell through inventory
Frequently Asked Questions
What is inventory turnover ratio?
Inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. It is calculated by dividing cost of goods sold by average inventory. A higher ratio indicates efficient inventory management and strong sales.
What is a good inventory turnover ratio?
It varies by industry. Grocery stores may turn inventory 14-20 times per year, while furniture stores may only turn 4-6 times. A ratio that is too low suggests overstocking, while too high may indicate stockouts and lost sales.
What is days sales of inventory?
Days sales of inventory (DSI) shows how many days it takes on average to sell through inventory. It is calculated as 365 divided by the turnover ratio. Lower DSI means faster selling. A DSI of 30 means inventory turns over roughly every month.
How can I improve inventory turnover?
Reduce lead times, improve demand forecasting, discontinue slow-moving products, negotiate smaller and more frequent deliveries, and run promotions on excess stock. Better inventory management frees up cash and reduces storage costs.
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