Calculating your inventory turnover (times/year) is straightforward once you know the Inventory Turnover formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Inventory Turnover Calculator.
What is Inventory Turnover?
The Inventory Turnover calculation tells you your inventory turnover (times/year) from a few simple inputs. The figure you are solving for here is the inventory turnover (times/year).
The Inventory Turnover formula
The core formula is:
Inventory turnover (times/year) = Cost of goods sold (year) ÷ Average inventoryHere is what each input means:
- Cost of goods sold (year) — a money amount. Example: ₹60,00,000.
- Average inventory — a money amount. Example: ₹10,00,000.
How to calculate it step by step
- Write down the cost of goods sold (year) (for example, ₹60,00,000).
- Write down the average inventory (for example, ₹10,00,000).
- Apply the formula above to get your inventory turnover (times/year).
- Double-check the result with the Inventory Turnover Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Cost of goods sold (year) | ₹60,00,000 |
| Average inventory | ₹10,00,000 |
| Inventory turnover (times/year) | 6.00 |
| Days inventory outstanding | 60.8 |
With cost of goods sold (year) of ₹60,00,000 and average inventory of ₹10,00,000, the inventory turnover (times/year) works out to 6.00.
Example 2
With cost of goods sold (year) of ₹1,20,00,000 and average inventory of ₹10,00,000, the inventory turnover (times/year) works out to 12.00.
| Result | Value |
|---|---|
| Inventory turnover (times/year) | 12.00 |
| Days inventory outstanding | 30.4 |
Example 3
With cost of goods sold (year) of ₹30,00,000 and average inventory of ₹10,00,000, the inventory turnover (times/year) works out to 3.00.
| Result | Value |
|---|---|
| Inventory turnover (times/year) | 3.00 |
| Days inventory outstanding | 121.7 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
Prefer not to do the maths by hand? — the Inventory Turnover Calculator does it instantly, for free, with the formula and a worked example built in.
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