Inventory Turnover Calculator
Enter COGS and your inventory to get the inventory turnover ratio, days inventory outstanding (DIO) and average inventory — live, with a full breakdown.
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- Rules cited on the page
Enter your figures — the result on the right updates as you type.
Calculation breakdown
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Disclaimer: Indicative estimate for planning purposes. Inventory turnover is one of several efficiency ratios; interpret it alongside gross margin, sales trend and your industry benchmark.
What is the inventory turnover ratio?
The inventory turnover ratio measures how many times a business sells and replaces its stock during a period. A higher turnover means faster-moving stock and less cash locked in inventory; a low turnover can signal overstocking, slow-moving goods or weak demand. Days inventory outstanding (DIO) converts the ratio into the average number of days it takes to sell your inventory.
The formula
Turnover is always calculated on cost (COGS), not sales revenue, so that the numerator and the inventory in the denominator are both measured at cost.
Inventory turnover = COGS ÷ Average inventory
Days inventory outstanding (DIO) = 365 ÷ Inventory turnover
Worked example
A trading business has COGS of ₹24,00,000 for the year, with opening inventory of ₹4,00,000 and closing inventory of ₹4,00,000.
Key terms explained
Inventory turnover ratio
How many times stock is sold and replaced in a period. Computed as COGS ÷ average inventory. A ratio of 6 means the entire inventory is cleared and restocked six times a year.
Days inventory outstanding (DIO / DSI)
Also called days sales of inventory. It is 365 ÷ turnover and shows the average number of days stock sits before it is sold. Lower DIO means cash is freed up faster.
Industry benchmarks
“Good” turnover is industry-specific — grocery and FMCG run very high turns (low DIO), while machinery, jewellery or furniture run low turns. Always compare against peers, not a universal number.
Overstocking vs stockout
Low turnover ties up cash, raises storage and obsolescence costs (overstocking). Very high turnover can mean thin buffers and risk of stockouts and lost sales — balance is the goal.
Questions people ask
Short answers on Inventory Turnover Calculator. Tap a question to open it.
01What is inventory turnover?
The number of times inventory is sold and replaced in a period: cost of goods sold ÷ average inventory. A higher figure means stock is moving faster and less capital is tied up in it.
02What is days inventory outstanding?
365 ÷ inventory turnover — the average number of days a unit sits in stock before it is sold. It is easier to act on than the ratio itself because it is expressed in time.
03Should I use sales or cost of goods sold?
Cost of goods sold, because inventory is carried at cost. Using sales inflates the ratio by the gross margin and makes comparison across businesses meaningless.
04What is a good inventory turnover ratio?
It is entirely sector-specific — a grocery retailer may turn stock every couple of weeks while a jeweller turns it once or twice a year. Compare against your own trend and your industry, not an absolute benchmark.
05What does a falling turnover ratio indicate?
Slowing sales, over-ordering, or obsolete stock accumulating. It ties up working capital and often precedes a write-down, so it is worth investigating by product line rather than in aggregate.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.