Donaldson R F Inventory Turnover Calculator
How many times a business sells through its stock in a period — and how many days that stock typically sits around.
How this is worked out
Inventory turnover = cost of goods sold ÷ average inventory value, where average inventory is simply the start and end values averaged (a quick approximation of inventory held over the period; a business with seasonal swings might use a more detailed monthly average instead). The result is how many times the entire average stock was sold and replaced during the period. Dividing the period's days by that turnover figure gives days inventory outstanding (also called days sales of inventory): roughly how many days, on average, a unit sits in stock before it sells.
Frequently asked questions
Is a higher turnover always better?
Usually, up to a point — it means less cash tied up in unsold stock and less risk of obsolescence, but turnover that's too high can also mean running out of stock (lost sales) or ordering too frequently in small, expensive batches. The "right" figure varies hugely by industry (a grocery sells through stock far faster than a furniture retailer, for instance).
Why cost of goods sold rather than revenue?
Because inventory is valued at cost, not at its eventual selling price — comparing it against COGS (also at cost) keeps the ratio consistent; using revenue would mix in the business's profit margin and distort the comparison.
Related tools: ROI Calculator, Markup & Margin Calculator, Break-Even Calculator.
Source / Last verified: standard managerial-accounting ratios (inventory turnover = COGS ÷ average inventory; days inventory outstanding = period days ÷ turnover) — read/checked 1 October 2026.