Inventory Turnover Calculator
Number of times inventory is sold and replaced over a period.
Higher turn = healthier cash flow and fresher product. Low turn ties up capital and risks markdowns.
- Formula
- COGS ÷ Average Inventory at Cost
- Benchmark
- Apparel 4–6x/yr, grocery 14–20x/yr
Worked example
- Annual COGS
- 500,000 SAR
- Avg inventory at cost
- 100,000 SAR
- Result
- 5.00x
How to read it
Turnover is how many times your average stock is sold and replaced over the period. A result of 5.00 on annual figures means roughly ten weeks of stock on hand at any moment — divide 52 by the turn to convert it into weeks of cover, which is usually the more useful number on the floor. The COGS period and the inventory average have to cover the same window, or the result is meaningless.
Common mistake
Dividing sales by inventory instead of COGS by inventory. Sales carry your margin and inventory at cost does not, so the answer comes out inflated by the markup — at a 50% margin, a business turning 4 times a year will look like it turns 8. Any turnover figure that looks impressively high is worth checking for this first.
What to do about it
Low turnover is almost never spread evenly. Before cutting the buy across the board, rank lines by turn and look at the slowest fifth — most of the problem usually sits in a small number of lines that should not have been reordered. And raising turn by simply holding less only works if availability holds: cutting depth on a line that sells out in week three moves the loss from markdown to missed sales.
Questions
What is a good inventory turnover?
It is category-specific. Apparel typically runs 4–6 times a year and grocery 14–20 on fast lines. A single benchmark across a mixed assortment hides more than it shows.
Average inventory or closing inventory?
Average, across as many points as you have. A closing figure taken the week after a large delivery understates turn; one taken after a clearance overstates it.
How does turnover relate to weeks of supply?
They are close cousins: 52 divided by annual turn gives your average weeks of cover across the year. The Weeks of Supply calculator uses today's stock and today's rate of sale, so it tells you where you stand now. Buyers tend to plan in weeks, finance tends to report in turns.