Fidamen

Inventory Turnover Calculator

This calculator computes the inventory turnover ratio, the average inventory during the period, and the average days in inventory using Cost of Goods Sold (COGS) and beginning/ending inventory values. Inventory turnover measures how many times inventory is sold and replaced during a period — a core efficiency metric for retailers, manufacturers, and distributors.

Use consistent accounting bases (e.g., same inventory valuation method and time period) when entering COGS and inventory values. Differences in valuation method (FIFO, LIFO, average cost) or significant seasonality can change interpretations. For guidance on financial reporting practices, consult authoritative sources such as the U.S. Securities and Exchange Commission and institutional accounting materials.

Updated Nov 15, 2025QA PASS — golden 25 / edge 120Run golden-edge-2026-01-23

Governance

Record f79fe8a8c477 • Reviewed by Fidamen Standards Committee

Inputs

Results

Updates as you type

Average Inventory

$55,000.00

Inventory Turnover Ratio

1.8182

Average Days in Inventory

200.75

OutputValueUnit
Average Inventory$55,000.00USD
Inventory Turnover Ratio1.8182—
Average Days in Inventory200.75days
Primary result$55,000.00

Visualization

Methodology

We compute Average Inventory as the arithmetic mean of beginning and ending inventory: (Beginning Inventory + Ending Inventory) / 2. This is the standard rolling-average approach used in financial analysis and teaching materials.

Inventory Turnover Ratio = COGS / Average Inventory. A higher ratio indicates inventory is turning over more frequently; a lower ratio suggests slower sales, potential obsolescence, or overstocking.

Average Days in Inventory = Period length (days) / Inventory Turnover. This converts turnover into a time-based measure: how many days, on average, inventory remains on hand before sale.

Practical note: if inventory fluctuates widely through the period, consider using a multi-point average (monthly balances) or the period-weighted average to reduce volatility in the metric. Also reconcile COGS to the same period as the inventory balances.

F.A.Q.

What inputs do I need?

Enter the period's Cost of Goods Sold (COGS) and the beginning and ending inventory values for the same period. Period length (days) defaults to 365 but can be adjusted for quarterly or monthly analysis.

What does a high or low inventory turnover mean?

A higher turnover generally indicates strong sales or efficient inventory management; very high turnover can signal stockouts and lost sales. Low turnover can indicate overstocking or slow-moving items. Benchmarks vary widely by industry—compare to sector peers when possible.

How do accounting methods affect the result?

Inventory valuation methods (FIFO, LIFO, weighted average) and how COGS is calculated will change both COGS and inventory balances, affecting the ratio. For cross-company comparisons, ensure consistent accounting policies.

What if my inventory fluctuates seasonally?

For seasonal businesses, a two-point average (beginning and ending) may misstate typical inventory. Use multi-point averages (monthly snapshots) or compute the metric on shorter comparable periods (quarter-over-quarter) to account for seasonality.

Can this calculator handle negative or zero values?

COGS and inventory values should be non-negative. Zero or near-zero average inventory will produce extremely large or undefined turnover values; interpret results carefully and verify inputs for correctness.

Are there standard benchmarks?

Benchmarks depend on industry and business model. Retail and perishable goods commonly have higher turnover than heavy manufacturing. Use industry reports or regulatory filings for peer comparisons; governmental and academic publications provide sector-level references.

Sources & citations

Further resources

Versioning & Change Control

Audit record (versions, QA runs, reviewer sign-off, and evidence).

Record ID: f79fe8a8c477

What changed (latest)

v1.0.0 • 2025-11-15 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Public QA status

PASS — golden 25 + edge 120

Last run: 2026-01-23 • Run: golden-edge-2026-01-23

Engine

v1.0.0

Data

Baseline (no external datasets)

Content

v1.0.0

UI

v1.0.0

Governance

Last updated: Nov 15, 2025

Reviewed by: Fidamen Standards Committee (Review board)

Credentials: Internal QA

Risk level: low

Reviewer profile (entity)

Fidamen Standards Committee

Review board

Internal QA

Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person

Semantic versioning

  • MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
  • MINOR: New features or fields that do not change existing outputs for the same inputs.
  • PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.

Review protocol

  • Verify formulas and unit definitions against primary standards or datasets.
  • Run golden-case regression suite and edge-case suite.
  • Record reviewer sign-off with credentials and scope.
  • Document assumptions, limitations, and jurisdiction applicability.

Assumptions & limitations

  • Uses exact unit definitions from the Fidamen conversion library.
  • Internal calculations use double precision; display rounding follows the unit's configured decimal places.
  • Not a substitute for calibrated instruments in regulated contexts.
  • Jurisdiction-specific rules may require official guidance.

Change log

v1.0.0 • 2025-11-15 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: 1816b593d21e