Inventory Turnover Ratio

Excel Formulas › Retail & Inventory

All versions

Inventory turnover counts how many times you sell and replace stock in a period — cost of goods sold divided by average inventory. Higher turnover means leaner, faster-moving stock.

Quick formula: turnover from COGS and average inventory:
=COGS / average_inventory
Cost of goods sold over average inventory value. A turnover of 6 means stock cycles six times a year.

The example

$480k COGS, $80k avg inventory.

AB
1ItemValue
2COGS480000
3Avg inventory80000 → 6.0×

The formula

The formula:

=B2 / B3 // COGS ÷ avg inventory

How it works

How it works:

  1. Cost of goods sold (COGS) is the cost of what you sold in the period.
  2. Average inventory is usually (beginning + ending) / 2 at cost.
  3. Divide for the turnover ratio — how many times inventory cycled.
  4. Use COGS (not sales) on top so both numerator and denominator are at cost.

Turnover and days are two views of the same thing: days inventory outstanding = 365 / turnover. A turnover of 6 means you hold about 61 days of stock. Use turnover to compare to benchmarks and days to plan reorder timing.

Try it: interactive demo

Live demo

COGS and average inventory.

Turnover · ~ days

Variations

Average inventory

Begin & end:

=(beginning_inv + ending_inv) / 2

Days inventory

From turnover:

=365 / turnover

At retail (alt)

Sales-based:

=sales / average_inventory_retail

Pitfalls & errors

Cost on both sides. Use COGS and inventory-at-cost, not sales, or the ratio is inflated.

Average, not snapshot. A single month-end can mislead — average across the period.

Seasonality. Annualize carefully for seasonal businesses.

Practice workbook

📊
Download the free Inventory Turnover Ratio practice workbook
An inventory-turnover sheet with the average-inventory, days, and retail variants, plus 4 challenges with answers. No sign-up required.

Frequently asked questions

How do I calculate inventory turnover in Excel?
Divide cost of goods sold by average inventory: =COGS / average_inventory. A turnover of 6 means stock cycled six times in the period.
How do I find average inventory?
Usually =(beginning_inventory + ending_inventory) / 2 at cost, or average the monthly values for more accuracy.
How does turnover relate to days of inventory?
Days inventory outstanding = 365 / turnover. A turnover of 6 is about 61 days of stock.

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Related formulas: Days inventory outstanding · Average inventory value · GMROI