Calculate Inventory Turnover
Total cost of inventory sold in a year.
Inventory Turns by COGS & Average Inventory
| Avg Inventory | $100K COGS | $250K COGS | $500K COGS | $1M COGS |
|---|
Higher turns = faster sales. Target 4–12+.
Inventory Turnover Calculator 2025: Optimize Stock, Cut Costs, Maximize Cash Flow
Inventory is cash in disguise. Too much ties up capital. Too little loses sales. Our inventory turnover calculator reveals how fast you sell and replace stock — the ultimate efficiency metric for retail, e-commerce, and manufacturing.
In 2025, with supply chain volatility and high interest rates, high inventory turnover is your competitive edge.
What Is Inventory Turnover?
Inventory Turnover = COGS ÷ Average Inventory
Average Inventory = (Beginning + Ending) ÷ 2
Days in Inventory = 365 ÷ Turnover
A turnover of 6 means you sell your entire inventory 6 times per year — every 61 days.
Why It Matters in 2025
Low turnover = high holding costs (storage, insurance, obsolescence). High turnover = fresh stock, lower risk, better cash flow.
Investors and lenders love high turns. It signals operational excellence.
How to Use the Calculator
- Enter annual COGS (from P&L)
- Input beginning and ending inventory (from balance sheet)
- Click “Calculate” — see turns, days, and efficiency rating
Real-World Examples
Example 1: Fashion Retail
COGS: $400,000
Avg Inventory: $80,000
Turnover = 5 → 73 days
Good for fashion (seasonal)
Example 2: Grocery Store
COGS: $2,000,000
Avg Inventory: $100,000
Turnover = 20 → 18 days
Excellent (perishables)
Example 3: Electronics Reseller
COGS: $300,000
Avg Inventory: $150,000
Turnover = 2 → 183 days
Too slow → obsolescence risk
Industry Benchmarks (2025)
| Industry | Avg. Turns | Days | Target |
|---|---|---|---|
| Grocery | 12–30 | 12–30 | 20+ |
| Fashion | 4–8 | 46–91 | 6+ |
| Electronics | 4–6 | 61–91 | 5+ |
| Auto Parts | 3–5 | 73–122 | 4+ |
| Amazon (overall) | 10–12 | 30–36 | — |
How to Improve Inventory Turnover
- Demand Forecasting: AI tools predict sales
- Just-in-Time (JIT): Order only what’s needed
- Discount Slow Movers: Clear dead stock
- Supplier Terms: Faster delivery, smaller batches
- ABC Analysis: Focus on high-turn items
- Dropshipping: Zero inventory
Use COGS Calculator to reduce costs.
Inventory Turnover vs GMROI
GMROI = Gross Margin ÷ Avg Inventory Cost
High turns + high margin = best ROI.
2025 Inventory Trends
- AI Predictive Analytics: 30–50% accuracy gain
- Nearshoring: Faster replenishment
- 3D Printing: On-demand production
- RFID Tracking: Real-time inventory
- Circular Economy: Resell, refurbish
Common Mistakes
- Using sales instead of COGS
- Ignoring seasonal fluctuations
- Averaging over too long a period
- Not segmenting by product line
Cash Flow Impact
High turnover → less cash tied up. Use Working Capital tool.
Inventory Turnover and Working Capital
Lower days in inventory → higher working capital efficiency.
Integrate with Other Tools
- Gross Margin: Balance turns and profit
- Cash Flow: Forecast inventory purchases
- Break-Even: Include inventory in fixed costs
Tax & Accounting Notes
Use FIFO, LIFO, or average cost. Affects COGS and turnover.
Conclusion: Turn Inventory into Profit
The inventory turnover calculator is your stock health monitor. Track it monthly. Improve it quarterly. Free up cash. Scale faster.
In 2025, slow inventory loses. Fast inventory wins.
Not financial advice. Consult an accountant.
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