Inventory Turnover Calculator: COGS, Stock and Days

Is an inventory turnover of 4.00x healthy?

On the defaults — $1,200,000.00 of cost of goods sold and $300,000.00 of average inventory — the inventory turnover is 4.00x, the days of inventory is 91.25 days, the inventory needed for a 6.00x turnover is $200,000.00, and the cost of goods sold needed for a 6.00x turnover is $1,800,000.00. The inventory turnover — cost of goods sold divided by average inventory — is the stock test: how many times a business sells through its stock in a year. A turnover of 8x or more usually means stock sells fast and little cash sits on shelves; below 2x can mean slow-moving stock, over-ordering, or dead stock tying up cash. Grocery stores turn stock 10x or more a year because food sells fast; car dealers and furniture stores turn stock slowly, often below 4x. The same turnover can mean different things by industry — a grocer and a car dealer do not sell the same things — so compare within an industry, not across them.

Four things about the model are worth stating plainly. First, the inventory turnover is the cost of goods sold divided by the average inventory — $1,200,000.00 ÷ $300,000.00 = 4.00x. Second, the days of inventory is 365 divided by the turnover — 365 ÷ 4.00 = 91.25 days. Third, the inventory needed at the target is the cost of goods sold divided by the target turnover — $1,200,000.00 ÷ 6.00 = $200,000.00. And fourth, the cost of goods sold needed at the target is the average inventory times the target turnover — $300,000.00 × 6.00 = $1,800,000.00; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $1,200,000.00 of cost of goods sold, $300,000.00 of average inventory, target turnover 6.00x.

Line 1 — the inventory turnover. The inventory turnover is $1,200,000.00 ÷ $300,000.00 = 4.00x.

Line 2 — the days of inventory. The days of inventory is 365 ÷ 4.00 = 91.25 days.

Line 3 — the inventory needed. The inventory needed for a 6.00x turnover is $1,200,000.00 ÷ 6.00 = $200,000.00.

Line 4 — the cost of goods sold needed. The cost of goods sold needed for a 6.00x turnover is $300,000.00 × 6.00 = $1,800,000.00.

Line 5 — the check. 4.00x × $300,000.00 = $1,200,000.00, the cost of goods sold; and $1,200,000.00 ÷ 4.00x = $300,000.00, the average inventory.

Every branch, checked

Cost of goods sold $600,000: Inventory turnover 2.00x; days of inventory 182.50 days; inventory needed for the 2.00x target $300,000.00; cost of goods sold needed for the 2.00x target $600,000.00 — With cost of goods sold of $600,000.00 the turnover falls to 2.00x — the low-turnover band: slow-moving stock, over-ordering, or dead stock tying up cash.

Average inventory $150,000: Inventory turnover 8.00x; days of inventory 45.63 days; inventory needed for the 8.00x target $150,000.00; cost of goods sold needed for the 8.00x target $1,200,000.00 — With average inventory of $150,000.00 the turnover rises to 8.00x — fast, and worth checking for stockouts.

Cost of goods sold $1,800,000: Inventory turnover 6.00x; days of inventory 60.83 days; inventory needed for the 6.00x target $300,000.00; cost of goods sold needed for the 6.00x target $1,800,000.00 — With cost of goods sold of $1,800,000.00 the turnover is 6.00x — exactly on the target.

Average inventory $400,000: Inventory turnover 3.00x; days of inventory 121.67 days; inventory needed for the 3.00x target $400,000.00; cost of goods sold needed for the 3.00x target $1,200,000.00 — With average inventory of $400,000.00 the turnover falls to 3.00x — 121.67 days of inventory on hand.

Cost of goods sold $300,000: Inventory turnover 1.00x; days of inventory 365.00 days; inventory needed for the 1.00x target $300,000.00; cost of goods sold needed for the 1.00x target $300,000.00 — With cost of goods sold of $300,000.00 the turnover is 1.00x — the stock sells through once a year, 365.00 days of inventory.

Average inventory $100,000: Inventory turnover 12.00x; days of inventory 30.42 days; inventory needed for the 12.00x target $100,000.00; cost of goods sold needed for the 12.00x target $1,200,000.00 — With average inventory of $100,000.00 the turnover rises to 12.00x — very fast: 30.42 days of inventory, and a stockout risk if ordering lags.

Cost of goods sold $0: Inventory turnover 0.00x; days of inventory — (undefined: 365 divided by zero has no answer); inventory needed for the 6.00x target $0.00; cost of goods sold needed for the 6.00x target $1,800,000.00 — With no cost of goods sold the turnover is 0.00x — nothing sold, and the days of inventory is undefined.

The reverses, worked backwards

Largest whole-dollar average inventory for the turnover to STAY at or above 6.00x: At the displayed $200,000 the figures are Inventory turnover 6.00x; days of inventory 60.83 days; inventory needed for the 6.00x target $200,000.00; cost of goods sold needed for the 6.00x target $1,200,000.00. At the displayed $200,000 the inventory turnover is 6.00x. At $200,001 the inventory is $1 over the $200,000 allowed — and the unrounded turnover is 5.999970x, which displays as 6.00x after rounding, so $200,000 is the largest whole-dollar average inventory for the turnover to stay at or above 6.00x.

Smallest whole-dollar cost of goods sold for the turnover to reach 5.00x: At the displayed $1,500,000 the figures are Inventory turnover 5.00x; days of inventory 73.00 days; inventory needed for the 5.00x target $300,000.00; cost of goods sold needed for the 5.00x target $1,500,000.00. At the displayed $1,500,000 the inventory turnover is 5.00x. At $1,499,999 the cost is $1 short of the $1,500,000 needed — and the unrounded turnover is 4.999997x, which displays as 5.00x after rounding, so $1,500,000 is the smallest whole-dollar cost of goods sold for the turnover to reach 5.00x.

Largest whole-dollar average inventory for the turnover to STAY at or above 4.00x: At the displayed $300,000 the figures are Inventory turnover 4.00x; days of inventory 91.25 days; inventory needed for the 4.00x target $300,000.00; cost of goods sold needed for the 4.00x target $1,200,000.00. At the displayed $300,000 the inventory turnover is 4.00x. At $300,001 the inventory is $1 over the $300,000 allowed — and the unrounded turnover is 3.999987x, which displays as 4.00x after rounding, so $300,000 is the largest whole-dollar average inventory for the turnover to stay at or above 4.00x.

Smallest whole-dollar cost of goods sold for the turnover to reach 8.00x: At the displayed $2,400,000 the figures are Inventory turnover 8.00x; days of inventory 45.63 days; inventory needed for the 8.00x target $300,000.00; cost of goods sold needed for the 8.00x target $2,400,000.00. At the displayed $2,400,000 the inventory turnover is 8.00x. At $2,399,999 the cost is $1 short of the $2,400,000 needed — and the unrounded turnover is 7.999997x, which displays as 8.00x after rounding, so $2,400,000 is the smallest whole-dollar cost of goods sold for the turnover to reach 8.00x.

Smallest whole-dollar cost of goods sold for the turnover to reach 3.00x: At the displayed $900,000 the figures are Inventory turnover 3.00x; days of inventory 121.67 days; inventory needed for the 3.00x target $300,000.00; cost of goods sold needed for the 3.00x target $900,000.00. At the displayed $900,000 the inventory turnover is 3.00x. At $899,999 the cost is $1 short of the $900,000 needed — and the unrounded turnover is 2.999997x, which displays as 3.00x after rounding, so $900,000 is the smallest whole-dollar cost of goods sold for the turnover to reach 3.00x.

Largest whole-dollar average inventory for the turnover to STAY at or above 10.00x: At the displayed $120,000 the figures are Inventory turnover 10.00x; days of inventory 36.50 days; inventory needed for the 10.00x target $120,000.00; cost of goods sold needed for the 10.00x target $1,200,000.00. At the displayed $120,000 the inventory turnover is 10.00x. At $120,001 the inventory is $1 over the $120,000 allowed — and the unrounded turnover is 9.999917x, which displays as 10.00x after rounding, so $120,000 is the largest whole-dollar average inventory for the turnover to stay at or above 10.00x.

A warning about the neighbours: every neighbour above shows as the target when rounded to two decimals, but its unrounded turnover is short of the target. A lender underwriting on the unrounded turnover would still say no. The page prints the unrounded neighbour value in full so the rounding does not mislead you.

What the defaults assume

The defaults are $1,200,000.00 of cost of goods sold, $300,000.00 of average inventory and a target turnover of 6.00x — Inventory turnover 4.00x; days of inventory 91.25 days; inventory needed for the 6.00x target $200,000.00; cost of goods sold needed for the 6.00x target $1,800,000.00. With Cost of goods sold $600,000, Inventory turnover 2.00x; days of inventory 182.50 days; inventory needed for the 2.00x target $300,000.00; cost of goods sold needed for the 2.00x target $600,000.00. With Average inventory $150,000, Inventory turnover 8.00x; days of inventory 45.63 days; inventory needed for the 8.00x target $150,000.00; cost of goods sold needed for the 8.00x target $1,200,000.00. With Cost of goods sold $1,800,000, Inventory turnover 6.00x; days of inventory 60.83 days; inventory needed for the 6.00x target $300,000.00; cost of goods sold needed for the 6.00x target $1,800,000.00. With Average inventory $400,000, Inventory turnover 3.00x; days of inventory 121.67 days; inventory needed for the 3.00x target $400,000.00; cost of goods sold needed for the 3.00x target $1,200,000.00. With Cost of goods sold $300,000, Inventory turnover 1.00x; days of inventory 365.00 days; inventory needed for the 1.00x target $300,000.00; cost of goods sold needed for the 1.00x target $300,000.00. With Average inventory $100,000, Inventory turnover 12.00x; days of inventory 30.42 days; inventory needed for the 12.00x target $100,000.00; cost of goods sold needed for the 12.00x target $1,200,000.00. With Cost of goods sold $0, Inventory turnover 0.00x; days of inventory — (undefined: 365 divided by zero has no answer); inventory needed for the 6.00x target $0.00; cost of goods sold needed for the 6.00x target $1,800,000.00. With Average inventory $0, Inventory turnover — (undefined: no average inventory to divide by); days of inventory —; inventory needed for the 6.00x target $200,000.00; cost of goods sold needed for the 6.00x target $0.00. With Cost of goods sold $0, Inventory turnover 0.00x; days of inventory — (undefined: 365 divided by zero has no answer); inventory needed for the 6.00x target $0.00; cost of goods sold needed for the 6.00x target $1,800,000.00. With Cost of goods sold $1,234,567, average inventory $345,678, Inventory turnover 3.57x; days of inventory 102.20 days; inventory needed for the 6.00x target $205,761.17; cost of goods sold needed for the 6.00x target $2,074,068.00. With Cost of goods sold $5,000,000, Inventory turnover 16.67x; days of inventory 21.90 days; inventory needed for the 6.00x target $833,333.33; cost of goods sold needed for the 6.00x target $1,800,000.00. With Average inventory $75,000, Inventory turnover 16.00x; days of inventory 22.81 days; inventory needed for the 6.00x target $200,000.00; cost of goods sold needed for the 6.00x target $450,000.00. With Cost of goods sold $1,200,001, Inventory turnover 4.00x; days of inventory 91.25 days; inventory needed for the 6.00x target $200,000.17; cost of goods sold needed for the 6.00x target $1,800,000.00. With Target bars — cost of goods sold $1,200,000, average inventory $300,000, inventory needed at the 3.00x target $400,000.00; at the 8.00x target $150,000.00; cost of goods sold needed at the 3.00x target $900,000.00; at the 8.00x target $2,400,000.00.

A note on the rounding: with cost of goods sold of $1,234,567 and average inventory of $345,678 the unrounded inventory turnover is 3.571436, which rounds half-up to 3.57x, and the unrounded days of inventory is 102.1998, which rounds to 102.20 days — the page prints the unrounded values so the rounding does not mislead you. With cost of goods sold of $1,200,001 and average inventory of $300,000 the unrounded inventory turnover is 4.000003, which rounds to 4.00x.

Output · formula · meaning

Who uses this

• The small-business owner checking the year: they learn $1,200,000.00 of cost of goods sold on $300,000.00 of average inventory gives a turnover of 4.00x — and they check the $200,000 reverse to see the largest average inventory that still reaches 6.00x.
• The lender sizing a loan: they learn a turnover above 8x is fast and below 2x is slow — and they check the $1,500,000 reverse to see the smallest cost of goods sold that reaches 5.00x.
• The owner whose turnover slipped to 2.00x: they learn the business holds 182.50 days of inventory — and they check the $300,000 reverse to see the largest average inventory that stays at or above 4.00x.
• The founder with a 12.00x turnover: they learn the business holds only 30.42 days of inventory — and they check the $120,000 reverse to see the largest average inventory that stays at or above 10.00x.

Accuracy & limitations

The math is first-principles: the inventory turnover is the cost of goods sold divided by the average inventory, rounded to two decimals half-up; the days of inventory is 365 divided by the turnover; the inventory needed at the target is the cost of goods sold divided by the target turnover; the cost of goods sold needed at the target is the average inventory times the target turnover. The reverses are judged on the UNROUNDED turnover: a neighbour one dollar short shows as the target when rounded to two decimals, but its unrounded turnover is below the target, so it does not meet the bar — the page prints the unrounded neighbour value in full. What the model cannot do is judge the business: the cost of goods sold covers only the direct cost of the goods sold and does NOT include rent, marketing or admin salaries; the average inventory is (opening inventory + closing inventory) ÷ 2, a simple average that hides swings inside the period; a turnover of 0 means nothing sold and the days of inventory is undefined; and the same turnover means different things by industry, so compare within an industry, not across them. Use it to see how fast your stock sells — then read the rest of the statements.

Frequently asked questions