MihsabaHow to use
Calculate inventory turnover and implied inventory days from cost of goods sold and average inventory valued at cost for the same period.
- Enter Cost of goods sold in the period.
- Enter Average inventory at cost.
- Enter Days in the period.
- Calculate, then review the results and method assumptions.
How it is calculated
Example
COGS of 12,000 and average inventory of 3,000 give four turns. In a 365-day period this implies 91.25 inventory days; for a 90-day period it implies 22.5 days.
Important notes
Do not pair sales revenue with inventory valued at cost. Beginning/end averaging is a rough estimate; use more observations for seasonality. Inventory days are an accounting ratio, not each item’s age or a promised sale date.
Worked examples and interpreting results
COGS of 12,000 and average inventory of 3,000 give four turns. In a 365-day period this implies 91.25 inventory days; for a 90-day period it implies 22.5 days.
| Case | Calculation | Result |
|---|---|---|
| Inventory turns | 12000 ÷ 3000 | 4 |
| Inventory days | 365 ÷ 4 | 91.25 days |
How to check the result
Do not pair sales revenue with inventory valued at cost. Beginning/end averaging is a rough estimate; use more observations for seasonality. Inventory days are an accounting ratio, not each item’s age or a promised sale date.
Frequently asked questions
How can I estimate average inventory?
Start with the beginning/end average if representative, or average regularly spaced balances to better reflect variation.
Is higher turnover always better?
It may accompany stock shortages or a different product mix. Interpret it alongside availability, lead times and business context.
Does this convert currencies or import campaign data?
It uses only entered numbers, without import or currency conversion. Align currency, period and metric definitions in your source before entering values.