Every business owner knows that managing a profitable business means paying attention to details, which includes strict inventory management. Inventory turnover is a key metric in helping business owners stay on top of their inventory.
Inventory Turnover Calculator
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What Is Inventory Turnover?
Inventory turnover is the ratio business owners use to determine how many times an item of inventory is sold/consumed within a given period of time. It is often also referred to as stock turnover or stock or inventory turns.
How To Calculate Inventory Turnover
If you want to know how to calculate inventory turnover, you will need the formula.
The inventory turnover formula is simple. You can calculate it for yourself by dividing the cost of goods sold (COGS) by your average inventory. You can calculate COGS using your annual income statement or our COGS calculator.
Use QuickBooks average inventory calculator to calculate your average inventory or simply add your beginning and ending inventories for the month and divide by two
While everyone should be familiar with the formula for an accurate inventory turnover calculation, you can easily calculate inventory turnover by using an Inventory Turnover Calculator.
You can also calculate your inventory turnover ratio by factoring in the number of days it takes to shift inventory. You can calculate this by dividing the cost of goods sold by your inventory and multiplying by 365 (days).
Example: If you're holding 5,000 inventory and have 30,000 in COGS this equates to 60.8 days for inventory turnover.
5,000/30,000 x 365.
5,000/30,000 x 365.
How To Use The Calculator
Use your financial statement to find the correct facts and figures necessary to use the calculator to determine the inventory turnover. Once you have everything you need, you can simply input the COGS figure, beginning inventory, and ending inventory. The calculator will do the rest for you.
How QuickBooks can help
Managing inventory can be difficult, especially with so many moving parts. QuickBooks inventory management software helps your business keep track of these moving parts and stay on top of your inventory with features like: real-time stock value tracking, low stock alerts, order tracking and more. Visit our pricing page to find a plan that is right for your business or get a 30-day free trial.
Visit our free tools and templates hub to find more free assets that can help you run and grow your business.
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