Estimate inventory turnover and approximate days of inventory on hand using cost of goods sold or net sales, beginning and ending inventory, and a chosen period length. Educational use only, not accounting or financial advice.
Enter period activity and inventory levels
Enter cost of goods sold or net sales for a period, beginning and ending inventory, and the period length in days to see a simple inventory turnover ratio and an estimate of days of inventory on hand, plus a curve showing how turnover and days on hand are related.
Tip: Start by entering your period COGS or net sales and your beginning and ending inventory values. The calculator will compute average inventory and show both COGS-based and sales-based turnover if data is available.
This tool is for educational use only and does not replace your accounting reports.
Inventory turnover measures how many times inventory is sold and replaced over a specific period. It indicates how efficiently a business manages its inventory.
Formula:
Inventory Turnover = COGS (or Sales) ÷ Average Inventory
A turnover of 4 means the inventory was sold and replaced 4 times during the period.
COGS-Based (More Common)
Uses Cost of Goods Sold in the numerator. More accurate for accounting purposes because inventory is valued at cost.
Sales-Based
Uses Net Sales in the numerator. Results in a higher turnover ratio because sales include profit margin. Used in some comparative analyses.
Days on hand (also called Days Sales of Inventory or DSI) represents how many days it would take to sell through the current inventory at the average sales rate.
Formula:
Days on Hand = Period Days ÷ Inventory Turnover
Example: If turnover is 4.55 over 365 days, then Days on Hand = 365 ÷ 4.55 ≈ 80 days.
Average inventory is typically calculated as the simple average of beginning and ending inventory for the period:
Average Inventory = (Beginning + Ending) ÷ 2
Some businesses use weighted averages or monthly snapshots for more accuracy, especially with seasonal inventory fluctuations.
Inventory turnover varies significantly by industry:
Disclaimer: This calculator is for educational and planning purposes only. It is not accounting, audit, tax, or inventory-management advice. Actual inventory turnover calculations may vary based on accounting policies, inventory valuation methods, and industry standards. Consult with qualified professionals for formal financial reporting.
Calculate gross, operating, and net profit margins for your business.
Understand the difference between markup and margin for pricing decisions.
Estimate how long your startup's cash reserves will last at current spending rates.
Calculate net present value and discounted cash flow for investment analysis.
Calculate how long it takes to recover an investment through cash flows.
Find the sales volume needed to cover fixed and variable costs.
Understanding inventory turnover helps you balance stock levels, improve cash flow, and make better purchasing decisions.
Explore All Business & Startup Calculators