Inventory Turnover & DSI Calculator

Quickly analyze how efficiently your business manages inventory.

Enter your cost of goods sold (COGS) and inventory values to calculate your inventory turnover ratio and days sales of inventory (DSI).

Examples

See how inventory turnover and DSI are calculated in real scenarios.

Retail Store Annual Turnover

Basic

A retail store sold goods worth $120,000 in a year. The average inventory was $30,000.

COGS: 120000 $

Average Inventory: 30000 $

Calculated Average Inventory

Beginning & Ending

A company had $15,000 in inventory at the start and $25,000 at the end of the year. COGS was $80,000.

COGS: 80000 $

Beginning Inventory: 15000 $

Ending Inventory: 25000 $

High Turnover Example

High Turnover

A fast-moving electronics shop had COGS of $200,000 and average inventory of $20,000.

COGS: 200000 $

Average Inventory: 20000 $

Low Turnover Example

Low Turnover

A furniture store had COGS of $50,000, beginning inventory $40,000, and ending inventory $60,000.

COGS: 50000 $

Beginning Inventory: 40000 $

Ending Inventory: 60000 $

Other Titles
Understanding Inventory Turnover & DSI: A Comprehensive Guide
Master inventory efficiency and optimize your business operations.

What is Inventory Turnover?

  • Definition and Importance
  • Key Formula
  • Industry Benchmarks
Inventory turnover measures how many times a company sells and replaces its inventory over a period. A higher ratio indicates efficient inventory management and strong sales.
Inventory Turnover Formula
Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory
Industry benchmarks vary: retail often has higher turnover, while luxury goods may have lower ratios.

Turnover Examples

  • A grocery store with COGS $100,000 and average inventory $20,000 has a turnover of 5.
  • A jewelry store with COGS $50,000 and average inventory $25,000 has a turnover of 2.

Step-by-Step Guide to Using the Calculator

  • Input Requirements
  • Calculation Steps
  • Interpreting Results
Enter your COGS and either average inventory or both beginning and ending inventory. The calculator computes turnover and DSI instantly.
Calculation Steps
If average inventory is not provided, it is calculated as (Beginning Inventory + Ending Inventory) / 2.
Inventory Turnover = COGS / Average Inventory. DSI = 365 / Inventory Turnover.

Step-by-Step Examples

  • Input: COGS $80,000, Beginning $10,000, Ending $14,000. Output: Turnover 6.67, DSI 54.75 days.
  • Input: COGS $120,000, Average Inventory $30,000. Output: Turnover 4, DSI 91.25 days.

Real-World Applications of Inventory Turnover

  • Business Decision Making
  • Cash Flow Optimization
  • Supply Chain Management
Inventory turnover is crucial for retailers, manufacturers, and wholesalers to assess stock efficiency and avoid overstocking or stockouts.
Improving Cash Flow
A higher turnover means faster conversion of inventory into sales, improving cash flow and reducing holding costs.

Business Use Cases

  • Retailers use turnover to plan promotions and restocking.
  • Manufacturers monitor turnover to optimize production schedules.

Common Misconceptions and Correct Methods

  • Misreading High Turnover
  • Ignoring Seasonality
  • Incorrect Inventory Values
A very high turnover may indicate understocking, not just efficiency. Always compare with industry averages and consider seasonality.
Correct Calculation Practices
Use accurate COGS and inventory values for the period. For seasonal businesses, use monthly or quarterly averages.

Misconception Examples

  • A toy store's turnover spikes in December due to holiday sales.
  • Incorrectly using sales instead of COGS leads to misleading ratios.

Mathematical Derivation and Examples

  • Formula Derivation
  • Worked Examples
  • DSI Calculation
Inventory Turnover = COGS / Average Inventory. DSI = 365 / Inventory Turnover. These formulas help businesses benchmark performance and identify trends.
Example Calculation
If COGS is $60,000 and average inventory is $15,000, then Turnover = 4, DSI = 91.25 days.

Mathematical Examples

  • COGS $60,000, Average Inventory $15,000 → Turnover 4, DSI 91.25 days.
  • COGS $90,000, Beginning $20,000, Ending $22,000 → Average $21,000, Turnover 4.29, DSI 85.08 days.