ClarityHow to use this tool
- Enter cost of goods sold, average inventory at cost.
- Select Calculate to view the result.
- Check the method and assumptions below before using the result.
Input reference and sample values
Use the units and choices shown for each field. Sample values are provided for practice, not as recommendations.
| Input | Format and units | Sample |
|---|---|---|
| Cost of goods sold | Numeric value. Zero or positive. | 120000 |
| Average inventory at cost | Numeric value. Must be greater than zero. | 30000 |
Result for these sample inputs
4 times
- Days inventory (365-day basis)
- 91.25
Select Try the example in the form to load these values and calculate them again. This replaces the current form inputs. Compare the result with the method and worked explanation below.
The method, explained
Inventory turnover = cost of goods sold ÷ average inventory at cost. Days inventory = 365 ÷ turnover for annual figures.
Annual cost of goods sold of 120,000 and average inventory of 30,000 give 4 turns and 91.25 inventory days.
What to keep in mind
Both inputs should use cost valuation, not retail selling prices. The days figure assumes annual turnover and a 365-day year.
Common questions
How do I estimate average inventory?
A simple estimate averages beginning and ending balances. Seasonal businesses may need more frequent measurements.
Is higher turnover always better?
Not necessarily. It can coexist with stockouts or inadequate inventory; context matters.
Methodology maintained by ClarityKit. How these tools are built and checked.