Inventory Turnover Calculator
Calculate inventory turnover ratio, days sales of inventory (DSI), GMROI, carrying cost, reorder point, and safety stock. Compare to industry benchmarks.
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Inventory Turnover Ratio
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Days Sales of Inventory —
Monthly Turnover —
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Turnover Ratio
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Average Inventory —
Days Sales of Inventory —
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Turnover Metrics
Average Inventory —
Turnover Ratio —
Days Sales of Inventory —
Weeks of Supply —
Profitability
Gross Margin % —
GMROI —
Annual Carrying Cost —
Replenishment
Reorder Point —
Safety Stock Estimate —
How to Use This Calculator
- Enter your annual COGS and average inventory value.
- Use the Annual tab to calculate average from beginning and ending inventory.
- Use By Product to compare turnover across 3 product lines.
- Use Benchmark to compare your ratio to industry averages.
Formula
Inventory Turnover = COGS ÷ Average Inventory
DSI = 365 ÷ Turnover Ratio
GMROI = Gross Profit ÷ Average Inventory
Reorder Point = Daily Usage × Lead Time
Example
Example: COGS $600K, Avg Inventory $120K → Turnover 5×, DSI 73 days. Revenue $900K → Gross Profit $300K, GMROI 2.5. Below retail average of 8× — opportunity to reduce stock or increase sales velocity.
Frequently Asked Questions
- Inventory Turnover = COGS ÷ Average Inventory. It shows how many times inventory is sold and replaced in a period. Higher is generally better, indicating efficient stock management.
- DSI = 365 ÷ Inventory Turnover. It shows how many days it takes to sell the average inventory on hand. Lower DSI = faster-moving stock.
- GMROI (Gross Margin Return on Inventory) = Gross Profit ÷ Average Inventory Cost. It measures how much gross profit you earn for every dollar invested in inventory. A GMROI above 1.0 is the minimum; top retailers aim for 3.0+.
- It varies by industry: Grocery ~14×, E-commerce ~10×, Retail ~8×, Manufacturing ~6×, Wholesale ~5×. Compare your ratio to your specific sector average.
- Reorder Point = Daily Usage × Lead Time. It is the inventory level at which you should place a new order so stock arrives before you run out.