Inventory turnover and days inventory outstanding
How many times did your stock sell through this year, and how many days does a dollar sit on the shelf before it sells? Enter COGS and your opening and closing inventory, and this calculator returns inventory turnover and days inventory outstanding (DIO), then shows how much cash a lower DIO would free up.
Landed cost of the goods you sold in the period, from your P&L. Build it per unit with the landed cost calculator.
Stock valued at cost, from your balance sheet or inventory system, not at retail price.
365 for a year, about 91 for a quarter, 30 for a month.
The DIO you want to run at, to see the cash it would release. Set to 0 to skip.
Stock turns 4.00 times a year and a dollar of inventory waits 91.3 days to sell. Running at 60 days would hold A$41,096 less in stock for the same COGS.
The days inventory outstanding formula, both ways
Turnover and DIO are the same measurement read from opposite ends. Turnover counts how many times the average stock sold through in the period. DIO turns that into days, which is easier to compare with supplier terms and lead times.
Both sides are at cost. Dividing revenue by inventory at cost mixes a retail number with a cost number and inflates turnover by your markup. For a period shorter than a year, the calculator also annualises turnover so a quarter can be compared with a year.
The defaults are demonstrative numbers, not a benchmark. Change a number in the calculator and this example follows.
A blended DIO hides the SKUs doing the damage
One store-wide figure averages fast sellers with stock that has not moved in months. The fix is almost always in a small part of the range.
Two snapshots miss the peak
Averaging only the start and end balances misses a stock build in the middle of the year. If inventory swings, average the monthly balances instead.
Faster is not always better
Very high turnover can mean thin stock and lost sales. Pair turnover with GMROI and your stockout history before you cut buys.
Slow stock is a margin problem
Units that sit become dead stock, then markdowns. The reorder or clear decision starts with which SKUs drag DIO up.
Questions operators ask
DIO = average inventory ÷ COGS × days in the period. With A$120,000 of average inventory and A$480,000 of COGS over 365 days, DIO is 120,000 ÷ 480,000 × 365 = 91.25 days. It is the same as 365 divided by inventory turnover, so a turnover of 4.00 gives the same 91.25 days.
Divide COGS for the period by average inventory at cost for the same period. Average inventory is usually the start and end balances added and halved. A$480,000 of COGS over A$120,000 of average inventory is a turnover of 4.00: the average stock sold through four times in the year.
There is no single good number. It depends on the category, how many SKUs you carry and how long your lead times are. The useful comparison is with your own history and between your own SKUs, read alongside margin: a slow line with a high margin can earn more than a fast one with a thin margin.
COGS, with inventory at cost. Revenue includes your markup and inventory at cost does not, so revenue divided by inventory overstates turnover. If your system only reports inventory at retail value, use sales over retail inventory instead, and keep the same basis every period so the trend stays comparable.
Every day of DIO is roughly a day of COGS paid for and not yet sold. It is one part of the cash conversion cycle. Cutting DIO from 91.25 to 60 days on A$480,000 of annual COGS holds about A$41,096 less in stock, cash that can fund marketing or the next buy.
Find the stock that is tying up cash
This page gives one store-wide figure. Blufire S7 Products / Inventory / Returns shows which SKUs earn and which bleed, what to reorder before it stocks out and what to clear before it goes dead, and S12 Financial Models tracks GMROI and open-to-buy on your own data.