How do you calculate inventory turnover?

Inventory turnover = Cost of goods sold ÷ Average inventory at cost, where average inventory is typically (beginning inventory + ending inventory) ÷ 2. A turnover of 6 means the inventory investment was sold and replaced roughly six times during the period. Use a consistent period — annual COGS with annual average inventory, not a mix of periods.

What is the inventory turnover ratio?

It's the same figure as inventory turnover: a ratio, not a percentage, showing how many times inventory cycles through in a period. Turnover = COGS ÷ average inventory at cost. Higher generally means less capital tied up per dollar of sales, but a ratio that's too high for the category can also signal chronic stockouts.

What is days sales of inventory (DSI)?

Days sales of inventory = 365 ÷ inventory turnover, showing roughly how many days of sales the average inventory would cover. A turnover of 5 implies about 73 days of inventory (365 ÷ 5). It's the same information as turnover expressed in days rather than cycles, which is often easier to compare against lead times.

Should I use cost or retail dollars to calculate turnover?

Use cost dollars whenever comparing to COGS: turnover = COGS ÷ average inventory at cost. The retail-dollar variant (net sales ÷ average inventory at retail) is valid on its own but must not be mixed with the cost-basis version — dividing COGS by retail-basis inventory, or sales by cost-basis inventory, produces a distorted ratio that isn't comparable to either standard.

What is the stock-to-sales ratio?

Stock-to-sales ratio = beginning-of-month inventory ÷ that month's sales, both usually stated at retail. A ratio of 3 means the store is carrying three months' worth of sales in stock at the start of the month. It's the monthly planning counterpart to turnover and is commonly used to set BOM inventory targets in an open-to-buy plan.

How do markdowns and aged stock affect inventory turnover?

Markdowns raise turnover by accelerating sell-through of slow stock, moving units out of average inventory faster than they'd otherwise leave. Aged, unsold stock does the opposite: it sits in the average-inventory denominator without generating matching COGS movement, dragging turnover down and inflating days of inventory until it's marked down or cleared.

What is a good inventory turnover ratio?

A good ratio depends almost entirely on the category. Grocery and perishables often run 12–25x; fast fashion 4–8x; footwear 3–5x; home goods 2–4x; fine jewelry 1–2x. Use the category table on this page as a starting point, then replace those ranges with your own historical turns and days of inventory. The best benchmark is your own last-season result for the same class, adjusted for the markdown cadence you intend to run.

Inventory turnover calculator

Inventory turnover measures how many times inventory is sold and replaced in a period: COGS ÷ average inventory at cost. Get the basis right — cost with cost, retail with retail — and the ratio tells you whether capital is moving or sitting on the floor.

See how sell-through drives turns All retail markdown formulas

The inventory turnover formula, worked

Inventory turnover = Cost of goods sold ÷ Average inventory at cost, where average inventory is usually (beginning inventory + ending inventory) ÷ 2. The retail-dollar variant, net sales ÷ average inventory at retail, answers the same question using sell-price-based figures instead of cost-based ones.

Example: a category runs $600,000 in annual COGS, starting the year with $110,000 of inventory at cost and ending with $90,000. Average inventory = ($110,000 + $90,000) ÷ 2 = $100,000. Turnover = $600,000 ÷ $100,000 = 6.0x. Days of inventory = 365 ÷ 6.0 ≈ 61 days.

The most common error is mixing bases — dividing COGS (a cost figure) by average inventory at retail, or net sales (a retail figure) by average inventory at cost. Either mix inflates or deflates the ratio without changing anything real about how fast stock is moving, so keep COGS with cost-basis inventory and net sales with retail-basis inventory.

Inventory turnover calculator

Annual COGS ($)

Beginning inventory at cost ($)

Ending inventory at cost ($)

Average inventory at cost: $100,000.00
Inventory turnover: 6x
Days of inventory: 61 days
Weeks of supply: 8.7 wks
Implied monthly stock-to-sales: 1.8

Stock-to-sales here is an approximation from annual COGS ÷ 12; for a precise monthly figure, use actual monthly sales at retail against beginning-of-month inventory at retail.

Reading the ratio

Turns, days, and weeks of supply are the same number three ways

Pick whichever unit matches the decision you're making.

Turnover (x)

For comparing periods or categories

COGS ÷ average inventory at cost. Easiest to benchmark year over year or against another category on the same cost basis.

Days of inventory

For comparing against lead time

365 ÷ turnover. Useful for checking whether inventory on hand will last longer than it takes to reorder and receive more.

Weeks of supply

For weekly buy and markdown decisions

52 ÷ turnover, or remaining units ÷ weekly velocity at the SKU level. This is the figure that drives markdown timing decisions.

Typical planning ranges by broad retail category

Category	Typical turnover range	Typical days of inventory	Notes
Grocery / perishables	12 – 25x	15 – 30 days	Very high velocity, low margin per unit
Fast fashion / apparel	4 – 8x	45 – 90 days	Season-driven; markdown cadence moves this a lot
General footwear	3 – 5x	75 – 120 days	Style and size-run dependent
Home goods / furniture	2 – 4x	90 – 180 days	Bigger ticket, slower replacement cycle
Fine jewelry / luxury	1 – 2x	180 – 365 days	Low velocity is normal for the category

These are directional planning ranges for orienting a discussion, not sourced industry benchmarks — always compare your own turns against your own history and category first.

From turnover to a markdown decision: a 6.0x apparel category

Metric	Value	How to read it	Action implied
Annual COGS	$600,000	Cost dollars moving through the category	The sales side of the equation
Average inventory	$100,000	($110k + $90k) ÷ 2	Capital tied up in stock
Turnover	6.0x	$600k ÷ $100k	Matches fast-fashion range
Days of inventory	61 days	365 ÷ 6.0	Within typical 45–90 day range
Markdown implication	Steady cadence	Clear slow stock before it ages past 90 days	Schedule breaks so aged inventory never exceeds a full quarter

A healthy turnover on paper can still hide a cluster of slow SKUs. The next step is to split turns by class or even by style to find the laggards that need a markdown.

How aged stock and markdowns move the ratio

Aged, unsold stock inflates average inventory without producing matching COGS, which pulls turnover down and pushes days of inventory up — the ratio is telling the truth about capital sitting still. A markdown clears that stock faster, moving units out of the denominator sooner and lifting turnover back toward the category's normal range.

That's the practical link between markdown planning and turnover: a markdown schedule that clears slow stock on a predictable cadence keeps turns steady, while deferring markdowns lets aged inventory quietly compound the problem month over month.

Keep planning

Sell-through and markdowns
Weekly velocity and weeks of supply, the SKU-level version of turnover.
Open-to-buy calculator
Turn a turnover target into a monthly purchasing budget.
Retail markdown formulas
The full formula reference alongside turnover.
Dead stock and excess inventory
What to do with the stock dragging turns down.

Answers

Inventory turnover questions

Turn turnover targets into a markdown cadence

Model markdown depth and timing per price period so slow stock moves out on plan instead of dragging turns down all season. Compare the result against the category ranges above to set a realistic floor.

Free, no sign-up, with CSV export and a shareable link. Pro ($29/mo) saves named season plans, imports inventory CSVs, and prints a decision memo.

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