Rate of Inventory Turnover Calculator

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Inventory Turnover Ratio Calculator

Measure how efficiently your business sells and replaces stock.

Turnover Ratio
0.00
Times per Year
Days to Sell
0
Average Days
Average Inventory Value: $0.00

Understanding Inventory Turnover

The Inventory Turnover Ratio is a critical efficiency metric that shows how many times a company has sold and replaced its inventory during a specific period. It helps business owners determine if they have too much stock relative to their sales level or if their sales are strong enough to clear the shelves quickly.

The Formula

1. Average Inventory = (Beginning Inventory + Ending Inventory) / 2
2. Turnover Ratio = Cost of Goods Sold / Average Inventory
3. Days Sales in Inventory = 365 / Turnover Ratio

Example Calculation

Suppose a retail clothing store has the following figures for the year:

  • Cost of Goods Sold: $500,000
  • Beginning Inventory: $40,000
  • Ending Inventory: $60,000

First, calculate Average Inventory: ($40,000 + $60,000) / 2 = $50,000.

Next, calculate the Ratio: $500,000 / $50,000 = 10.00. This means the store clears its entire inventory 10 times a year, or roughly every 36.5 days.

What is a "Good" Turnover Rate?

High turnover ratios generally indicate strong sales and effective inventory management. However, if the ratio is too high, it might suggest the company is losing sales because it doesn't have enough stock. Conversely, a low ratio suggests overstocking, obsolescence, or deficiencies in the product line or marketing effort.

function calculateTurnover() { var cogs = parseFloat(document.getElementById('cogsInput').value); var beg = parseFloat(document.getElementById('begInventory').value); var end = parseFloat(document.getElementById('endInventory').value); if (isNaN(cogs) || isNaN(beg) || isNaN(end)) { alert("Please enter valid numerical values for all fields."); return; } if (cogs < 0 || beg < 0 || end 0) { days = 365 / ratio; } document.getElementById('ratioResult').innerHTML = ratio.toFixed(2); document.getElementById('daysResult').innerHTML = Math.round(days); document.getElementById('avgInvResult').innerHTML = "$" + avgInventory.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resultsArea').style.display = 'block'; // Smooth scroll to results document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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