Inventory Turnover and Days of Inventory Calculator
See how many times you sell through your stock in a period and how many days of inventory you hold on average. Add net sales to see gross margin return on inventory (GMROI), the gross margin each dollar of stock earns.
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Questions
- How do you calculate inventory turnover?
- Inventory turnover = cost of goods sold for the period ÷ average inventory at cost. Average inventory is usually (opening inventory + closing inventory) ÷ 2. Use cost on both sides: mixing sales at selling price with stock at cost overstates turnover.
- What is days of inventory?
- Days of inventory, also called days inventory outstanding or days on hand, = average inventory ÷ cost of goods sold × days in the period. It tells you how long, on average, stock sits before it sells.
- What is a good inventory turnover?
- It depends on the category and how you sell. Fast moving consumables turn far more often than furniture or seasonal goods. Compare against your own history and similar products, and look at turnover per SKU, because a healthy average can hide dead stock.
- What is GMROI?
- Gross margin return on inventory = gross margin ÷ average inventory at cost. A GMROI of 3 means each dollar invested in stock returned three dollars of gross margin in the period.
- Should I use a month or a year?
- Either works as long as cost of goods sold and inventory cover the same period. The calculator also annualizes turnover to 365 days, so a month can be compared with a year.