Inventory Turnover Calculator

Why It Matters

Slow-turning inventory ties up cash that could otherwise fund new orders or ad spend, and it raises the risk of markdowns or write-offs on products losing relevance. Comparing turnover across product lines often reveals which SKUs are quietly draining working capital.

Example

A store has $600,000 in cost of goods sold for the year against an average inventory value of $150,000. Inventory turnover is $600,000 divided by $150,000, which equals 4 times per year.

Frequently Asked Questions

• What's a good Inventory Turnover rate?

  It varies enormously by product category, perishable or fast-fashion goods often turn over 8 or more times a year, while durable goods may healthily turn over just 2 to 4 times.

• What does low Inventory Turnover signal?

  Overstocking, weak demand for a product line, or pricing that's out of step with the market are the most common causes, all of which tie up cash that could be deployed elsewhere.