Retail & E-commerce

Inventory Turnover Ratio

Calculate how efficiently your business sells and replaces its stock over a year, and find out exactly how many days it takes to clear your shelves.

Sales & Stock Data (Annual)

The direct costs of producing the goods sold by the company.

Value of stock at the start of the year.

Value of stock at the end of the year.

Efficiency Metrics

Turnover Ratio

4.80x

Times inventory is sold and replaced per year.

Days Sales of Inventory 76

It takes ~76 days to clear your shelves.

Interpreting Inventory Turnover

  • High Ratio (e.g. 10x): A high ratio indicates strong sales or highly effective inventory management. The business is not holding onto dead stock. However, a very high ratio might mean inadequate inventory levels, leading to stockouts and lost sales. Grocery stores typically have high turnover.
  • Low Ratio (e.g. 2x): A low ratio implies weak sales, excess inventory, and overstocking. This ties up working capital in unsold goods, which costs money to store and risks becoming obsolete or expiring. Luxury jewelers or car dealerships typically have lower turnover.
  • Days Sales of Inventory (DSI): This flips the ratio to show exactly how many days it takes to turn inventory into sales. If your DSI is 90 days, it means your cash is trapped in a warehouse for 3 months before a customer buys it.