Calculate your inventory turnover ratio

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How many times your inventory cycles through in a year. High ratio = efficient. Low ratio = excess inventory tying up capital.

Operations KPI Live Calculation Days Included

Inventory metrics

COGS comes from your P&L. Average inventory = (beginning + ending) ÷ 2 from the balance sheet.

Annual Cost of Goods Sold (COGS)

Average inventory value

Benchmark guidance

FMCG / retail — 10-15x (fast-moving consumer goods).
Apparel / fashion — 4-6x (seasonal cycles).
Electronics — 6-8x (rapid product life cycle).
Automotive / heavy industry — 2-4x (longer cycles).
Luxury / jewellery — 1-2x (expensive holding).
Pharma — 4-6x (regulatory expiry constraints).

Turnover ratio

5.00x

Inventory turns over 5.00 times per year (every 73 days)

Annual COGS₹50.00 L

Average inventory₹10.00 L

Turnover ratio5.00x

Days in inventory73 days

How inventory turnover is calculated

Turnover measures how efficiently you sell through stock. Higher = leaner operations = less capital tied up in unsold goods.

01
Get COGS
From the income statement — direct cost of items sold in the year.
```
COGS = annual cost of goods sold
```
02
Average inventory
Average of opening and closing inventory from the balance sheet.
```
avg = (begin + end) ÷ 2
```
03
Divide + convert
Turnover = COGS ÷ avg inventory. Days = 365 ÷ turnover.
```
ratio = COGS ÷ avg
days = 365 ÷ ratio
```

FormulaTurnover = COGS ÷ Avg Inventory; Days in Inventory = 365 ÷ TurnoverHigher turnover = faster cash recovery, lower carrying costs, less obsolescence risk.

Why we use this formula by default.
Indian payroll convention, statutory references, and the SaaS tooling that runs payroll all converge on this approach. Below are the authoritative sources we cross-checked.

Accounting

ICAI Ind AS 2

Indian Accounting Standard for inventory accounting and valuation.

Definition

Investopedia Turnover Ratio

Standard turnover ratio definition and applied examples.

Methodology

CFI Operations KPIs

CFI's operational metrics framework and industry benchmarks.

Strategic

McKinsey Operations

Best practices for inventory optimization across industries.

Industry Data

NSE Sector Averages

Indian listed company inventory turnover benchmarks.

Software

SAP / Oracle Inventory

Enterprise inventory management software standards.

FAQs about inventory turnover

What's a good inventory turnover ratio?

Depends on industry. FMCG: 10-15x. Apparel: 4-6x. Electronics: 6-8x. Heavy machinery: 2-4x. Compare your ratio to industry average + competitors, not absolute numbers.

Is higher turnover always better?

Not always. Too high may mean (a) understocking (lost sales), (b) too-frequent ordering (high setup costs), (c) low margins forcing volume play. Balance turnover with profitability metrics.

What does low turnover indicate?

Excess inventory, slow-moving SKUs, weak demand forecasting, obsolete products. Each impacts: tied-up capital, warehousing costs, carrying losses, write-downs.

Days in Inventory vs Turnover — which to use?

Same metric, two formats. Turnover (5x) is good for comparing across industries. Days (73 days) is better for operational planning (how often to reorder).

Why "average" inventory and not ending?

Inventory levels fluctuate. Using just ending under-counts COGS-supporting stock. Average (begin + end) ÷ 2 is the standard. Better: monthly averages.

How do I improve turnover?

JIT (just-in-time) ordering, ABC analysis to focus on fast-movers, demand forecasting accuracy, faster reorder cycles, clearance of slow stock, supplier lead time reduction.

What is "inventory days outstanding"?

Same as days in inventory: 365 ÷ turnover. Tells you how many days you hold a typical SKU. Useful in cash conversion cycle calculation (DIO + DSO − DPO).

Does turnover affect cash flow?

Yes. Lower turnover = more cash tied in stock. Higher turnover = faster cash recovery. Combine with payment terms (DPO) and receivables (DSO) for full cash conversion picture.

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Tighter ops — better inventory cycles

Superworks integrates inventory ops with payroll, attendance, and warehouse staffing — reduce carrying costs and improve turnover end-to-end.

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Calculate your inventory turnover ratio

Inventory metrics

Benchmark guidance

How inventory turnover is calculated

Get COGS

Average inventory

Divide + convert

ICAI Ind AS 2

Investopedia Turnover Ratio

CFI Operations KPIs

McKinsey Operations

NSE Sector Averages

SAP / Oracle Inventory

FAQs about inventory turnover

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