Inventory Turnover Calculator

It depends heavily on category: perishable or fast-fashion goods often run somewhere in the neighborhood of 10-20x annual turnover to avoid spoilage or style obsolescence (large grocery chains toward the higher end, smaller independents lower), while durable goods, furniture, or specialty items can run efficiently at 3-6x. Compare your ratio to your own historical trend and to close competitors in the same category rather than a single industry-wide number, since the right target differs by margin structure and shelf life.

Days to Sell tells you, on average, how long a unit of inventory sits before it sells, which directly informs how far ahead of a stockout you need to place your next purchase order given your supplier's lead time. If your supplier takes 30 days to deliver and your Days to Sell is 45, you have roughly a 15-day cushion -- tight enough that a demand spike or a supplier delay could still cause a stockout.

GMROI (Gross Margin Return on Inventory Investment) shows how many gross-margin dollars you earn per dollar tied up in average inventory, combining turnover speed with profitability per sale. A category that turns over quickly but sells at thin margins can generate a lower GMROI than a slower-turning category with a much higher margin, which is why turnover alone can be a misleading measure of how well inventory capital is being used.

The Annual Holding Cost Rate captures costs that don't show up in COGS or turnover at all -- warehousing, insurance, spoilage, obsolescence, and the opportunity cost of capital tied up in stock. Even at an identical turnover ratio, a category with a higher holding cost rate (bulky, fragile, or fast-obsolescing goods) is more expensive to carry, which is a separate reason to keep less of it on hand than the turnover ratio alone would suggest.

Inventory Turnover Ratio becomes 0, and Days to Sell / Weeks of Supply report as "Never (no sales)" rather than a numeric value -- zero COGS means nothing is selling through that inventory at all, so there's no meaningful finite number of days or weeks to report, and a literal "0 days" would misleadingly read as instant turnover rather than none.