# What is my inventory turnover?

Computes the inventory turnover ratio, cost of goods sold ÷ average inventory, and days’ sales in inventory (DSI).

- Page: https://www.acalculator.org/finance/inventory-turnover-calculator
- JSON spec: https://www.acalculator.org/finance/inventory-turnover-calculator.json
- Version: ca1308ae21a9

## Default answer

Example with the default inputs (Cost of goods sold $60,000.00, Inventory at the start $35,000.00, Inventory at the end $40,000.00): Cost of goods sold of $60,000.00 turned the inventory over 1.6 times, and the ending inventory of $40,000.00 covers 243.33 days of sales.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| cogs | Cost of goods sold | The cost of the goods sold during the period, from the income statement. |
| bi | Inventory at the start | Inventory on the balance sheet at the start of the period. Leave empty to use the ending inventory alone. |
| ei | Inventory at the end | Inventory on the balance sheet at the end of the period. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| turnover | Inventory turnover | Cost of goods sold ÷ average inventory: how many times the inventory sold through. |
| dsi | Days’ sales in inventory (DSI) | Ending inventory ÷ cost of goods sold × 365. |
| average | Average inventory | (Beginning inventory + ending inventory) ÷ 2, or the ending inventory when no beginning is given. |

## Method

Average inventory = (beginning inventory + ending inventory) ÷ 2 (ending inventory alone when no beginning is given). Inventory turnover = cost of goods sold ÷ average inventory. DSI = ending inventory ÷ cost of goods sold × 365.

## Assumptions

- Cost of goods sold covers one year, the period the two inventory balances start and end; DSI uses a 365-day year.
- Arithmetic is exact on the typed decimals; the ratios show to 2 decimals, halves up.

## Worked examples

1. cogs = $60,000.00, bi = $35,000.00, ei = $40,000.00 gives turnover = 1.6, dsi = 243.333333, average = $37,500.00. Source: OpenStax, Principles of Finance, 6.2 Operating Efficiency Ratios (inventory turnover = cost of goods sold ÷ average inventory; days’ sales in inventory = ending inventory ÷ cost of goods sold × 365; Clear Lake Sporting Goods). https://openstax.org/books/principles-finance/pages/6-2-operating-efficiency-ratios: 60,000 ÷ ((35,000 + 40,000) ÷ 2) = 1.6 times.
2. cogs = $500,000.00, bi = $80,000.00, ei = $120,000.00 gives turnover = 5, dsi = 87.6. Source: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (inventory turnover ratio = cost of sales ÷ average inventory for the period). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements.
3. cogs = $60,000.00, ei = $40,000.00 gives turnover = 1.5, dsi = 243.333333.

## FAQ

### What is inventory turnover?

Inventory turnover counts how many times a company sells through its average inventory in a year. A turnover of 2 means the stock on hand was sold and replaced about twice.

### How do I calculate inventory turnover?

Divide the cost of goods sold by the average inventory. The average is the starting inventory plus the ending inventory, divided by 2. Clear Lake Sporting Goods had $60,000 of cost of goods sold and inventory of $35,000 and $40,000, so its turnover was 60,000 ÷ 37,500 = 1.6 times.

### What is days' sales in inventory (DSI)?

DSI estimates how many days the ending inventory would last at the year's rate of sales. Divide the ending inventory by the cost of goods sold and multiply by 365. Clear Lake's $40,000 of inventory against $60,000 of cost of goods sold is 243.33 days.

### Why use cost of goods sold and not sales?

Inventory is carried at cost on the balance sheet, so the cost of goods sold compares like with like. Sales include the markup, which would make the turnover look higher than it is.

### Is a high inventory turnover good?

Usually a higher turnover means stock sells quickly and less cash is tied up in it. Too high can mean the shelves run empty and sales are lost. Compare with past years and with businesses that sell similar goods.

### What if I only have one balance sheet?

Leave the starting inventory empty. The calculator then uses the ending inventory in place of the average. DSI always uses the ending inventory.

## Sources

- OpenStax, Principles of Finance, 6.2 Operating Efficiency Ratios: inventory turnover = cost of goods sold ÷ average inventory, average = (beginning + ending) ÷ 2, days' sales in inventory = ending inventory ÷ cost of goods sold × 365, and the Clear Lake Sporting Goods example (1.6 times; 243 days). https://openstax.org/books/principles-finance/pages/6-2-operating-efficiency-ratios (retrieved 2026-10-18)
- U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements: inventory turnover ratio = cost of sales ÷ average inventory for the period, the average being the current and previous balances added and divided by two. https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements (retrieved 2026-10-18)