Business Calculators

Inventory Analysis Calculator

Measure how efficiently you sell through stock with inventory turnover and days-on-hand — key signals of working-capital health.

Inputs

Cost of goods sold (annual)

Average inventory value

Estimates only. Change any value to recalculate instantly.

Inventory turnover 6.7× you sell through stock about every 55 days

Turnover ratio 6.67× times per year

Days inventory on hand 55 days

Annual COGS $600,000

Average inventory $90,000

A turnover of 6.7× means you cycle through your average inventory that many times a year. Higher turnover frees up cash and reduces holding costs, but too high can signal stockouts and lost sales — the right level depends on your industry.

A worked example

Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.

Inputs

Cost of goods sold (annual): $600,000
Average inventory value: $90,000

Inventory turnover

6.7×

you sell through stock about every 55 days

Turnover ratio6.67×
Days inventory on hand55 days
Annual COGS$600,000

How the inventory turnover changes with cost of goods sold (annual)

Holding the other inputs at the example above, here is how the result moves as cost of goods sold (annual) changes.

Cost of goods sold (annual)	Inventory turnover	Turnover ratio
$300,000	3.3×	3.33×
$600,000	6.7×	6.67×
$1,200,000	13.3×	13.33×
$2,400,000	26.7×	26.67×

The math behind it

Inventory turnover is annual cost of goods sold divided by average inventory value — how many times you sell through and replace your stock in a year. Days inventory on hand is 365 divided by that turnover, translating the ratio into the average number of days a unit sits before it sells.

Assumptions & limits

Turnover uses cost of goods sold over average inventory, both valued at cost, so the two figures are on the same basis.
Average inventory is a single input; a true average often blends beginning and ending balances or several period-end snapshots.
Results are annual — if you feed in a quarter's cost of goods sold, the turnover and days figures will be off.
The right turnover is industry-specific: grocers turn stock many times a year, while heavy-equipment dealers turn it only a few.

Common questions

Is a higher inventory turnover always better?

Usually, but not without limit. Higher turnover means you tie up less cash in stock and spend less on storage and spoilage. But push it too far and you risk stockouts — empty shelves, lost sales, and unhappy customers. The goal is the level that keeps product available while freeing as much cash as possible, and that level depends on your industry and lead times.

What are days inventory on hand?

It is the average number of days a product sits in inventory before it sells, calculated as 365 divided by your turnover ratio. A turnover of 6 means about 61 days on hand. Fewer days means faster-moving stock and less cash locked up; more days means slower movement and higher carrying costs.

Should I use cost of goods sold or sales for turnover?

Cost of goods sold, which is what this calculator uses. Inventory is carried on the books at cost, so dividing cost of goods sold by average inventory compares like with like. Using sales revenue instead would inflate the ratio by baking in your profit margin, overstating how efficiently you actually move stock.