This free inventory turnover calculator shows how many times you sell and replace your stock in a period, and how long the average item sits before it moves. Enter your cost of goods sold and your average inventory — or your opening and closing stock — and it instantly returns the inventory turnover ratio and days inventory outstanding (DIO). It doubles as a stock turnover ratio calculator and an inventory days calculator for any period.
How to calculate inventory turnover
The inventory turnover ratio measures how efficiently you convert stock into sales. The formula is:
- Inventory turnover ratio =
COGS ÷ average inventory - Average inventory =
(opening stock + closing stock) ÷ 2 - Days inventory outstanding =
period days ÷ turnover ratio
Worked example: if your cost of goods sold for the year is ₹50,00,000 and your average inventory is ₹10,00,000, your inventory turnover is ₹50,00,000 ÷ ₹10,00,000 = 5 times per year. That means you cycle through your entire stock five times a year, and your days inventory outstanding is 365 ÷ 5 = 73 days — on average, an item sits in your store for about ten weeks before it is sold or consumed in production.
What is a good inventory turnover ratio?
There is no single right number — it varies sharply by industry — but for most Indian manufacturing SMEs a turnover of roughly 4 to 8 times per year (about 45 to 90 days of inventory) is healthy. A very low ratio is a warning sign: cash is locked up in slow-moving or dead stock, storage costs rise, and material can become obsolete. A very high ratio can mean you are running lean and efficient — or that you are cutting it too fine and risking stock-outs that stall production. The most useful comparison is against your own trend over time and against peers in your industry.
Turnover vs days inventory outstanding
The two numbers say the same thing in different units. The turnover ratio is "how many times per year" (higher is faster); days inventory outstanding is "how many days per cycle" (lower is faster). DIO is often easier to act on because it speaks the language of the shop floor — "our raw material sits for 70 days before it hits a work order" is a sentence a purchase manager can do something about. Reducing DIO frees up working capital that would otherwise sit on the racks.
Inventory turnover reference
A quick map of the terms and formulas this calculator uses.
| Term | Formula | What it tells you |
|---|---|---|
| Average inventory | (opening + closing) ÷ 2 | Typical stock value held during the period. |
| Inventory turnover ratio | COGS ÷ average inventory | Times you cycle through stock per period. |
| Days inventory outstanding | period ÷ turnover | Average days an item sits before it moves. |
From a yearly ratio to live stock control
An inventory turnover calculator answers one question for the whole business, once, from numbers you type in. The real lever is seeing turnover and dead stock by item and by warehouse, continuously. Inside OEMup ERP, COGS, stock valuation and movement are live, so turnover, DIO and ageing are computed per SKU automatically — you see which items are dragging your ratio down before they become dead stock, and reorder levels adjust to real consumption. Start free or explore the inventory module.
Inventory Turnover Calculator — frequently asked questions
How do I calculate inventory turnover?
Divide cost of goods sold by average inventory. With COGS of ₹50,00,000 and average inventory of ₹10,00,000, turnover = 5 times per year. Average inventory is usually (opening + closing) ÷ 2. The calculator above does it instantly.
What are days inventory outstanding (DIO)?
The average days stock sits before it is sold or consumed: period ÷ turnover, so 365 ÷ 5 = 73 days. Lower DIO means stock moves faster and less cash is tied up.
What is a good inventory turnover ratio?
For most manufacturing SMEs, 4 to 8 times per year (about 45 to 90 days) is healthy. Too low locks up cash in dead stock; too high risks stock-outs. Compare against your own trend and your industry.
Should I use COGS or sales for inventory turnover?
Use COGS. Inventory is carried at cost, so dividing cost-based COGS by cost-based average inventory is accurate. Sales include profit margin and overstate turnover.
Need more shop-floor tools? Browse all free calculators, or try the Production Cost Calculator and the Break-Even Calculator.
Free the cash stuck in your stock
OEMup tracks inventory turnover, DIO and dead stock per item from live data — built for Indian manufacturing SMEs.
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