Scale Stage

Inventory Turnover Calculator

See how fast inventory moves and how many days it sits on the shelf.

(Beginning + ending inventory) ÷ 2.

What inventory turnover actually measures

Inventory turnover is the number of times you sell and replace your entire inventory in a period. A turnover of 6 means you sell everything you have 6 times per year — roughly every 61 days.

Higher turnover is usually better. It means less cash tied up in stock, lower storage costs, and less risk of products becoming obsolete. But too high can mean stockouts and missed sales. The right number depends on your industry and margin structure.

The formulas

  • Inventory turnover = COGS ÷ average inventory value
  • Days to sell (DSI) = period days ÷ turnover
  • Restock frequency = turnover (times per period)
  • Cash tied up = average inventory value (this is your working capital in stock)

Worked example

COGS $60,000/year, average inventory $10,000:

  • Turnover = $60,000 ÷ $10,000 = 6 turns per year
  • Days to sell = 365 ÷ 6 = ~61 days
  • Restock: every ~2 months

Same numbers but inventory $30,000:

  • Turnover = 2 turns per year
  • Days to sell = ~183 days
  • Cash tied up: $30,000 instead of $10,000

Same revenue. Same margin. The second business has 3× the cash locked in inventory and takes 3× longer to cycle. That's a very different risk profile.

Industry benchmarks

  • E-commerce (general): 4–12 turns/year
  • Apparel / fashion: 6–12 turns/year
  • Electronics: 6–10 turns/year
  • Furniture / home goods: 2–4 turns/year
  • Food / perishable: 12–24 turns/year
  • Books / media: 3–6 turns/year

How to improve turnover

  1. Reduce order quantities. Smaller, more frequent orders from suppliers reduce average inventory.
  2. Cut slow SKUs. The bottom 20% of SKUs often holds 50%+ of dead stock.
  3. Increase demand. Better marketing, pricing, and merchandising.
  4. Discount slow movers. Recover cash from aging stock even at lower margin.
  5. Improve forecasting. Use historical sales to plan reorder points more accurately.
  6. Negotiate with suppliers. Dropshipping or JIT reduces inventory risk entirely.

What this tool does not include

  • Per-SKU analysis (this is company-wide)
  • Seasonality adjustments
  • Storage cost per unit
  • Holding cost as % of inventory value (usually 20–30%/year)
  • Opportunity cost of cash tied up

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Frequently asked questions

What is inventory turnover?

Inventory turnover = COGS ÷ average inventory value. It measures how many times you sell and replace inventory in a period.

What is a good inventory turnover ratio?

E-commerce: 4–12 turns per year. Fast fashion: 8+. Furniture: 2–4. Higher is generally better but too high can mean stockouts.

How do I calculate days to sell?

Days to sell = 365 ÷ inventory turnover. At turnover of 6, days to sell is 61 days.

Why does inventory turnover matter?

Higher turnover means less cash tied up in inventory, lower storage costs, and less risk of obsolescence.

What if turnover is too low?

Too low means slow-moving stock. Reduce order quantities, discount slow SKUs, improve product-market fit, or reduce SKU count.

What if turnover is too high?

Too high can mean stockouts. You may be losing sales. Increase safety stock or adjust reorder points.

Estimates only. Inventory turnover depends on industry, seasonality, and SKU mix. This is a planning model. Confirm with your accounting data before making purchasing decisions.