Inventory Turnover Ratio:
Formula, Benchmarks & Calculator
Inventory turnover measures how many times a year you sell through your stock — the single best headline number for inventory health. The formula, a worked example, benchmarks by vertical, a free calculator, and how to actually improve the number.
By Replenagise · Updated 11 July 2026 · 8 min read
The inventory turnover formula
Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory Value
Both at cost, over the same period (usually a year). Sell £300,000 of goods at cost while holding an average of £50,000 in stock and your turnover is 6× — you sell through your entire inventory six times a year. Average inventory is (opening + closing) ÷ 2, or a monthly average if your stock swings seasonally. The companion number, days of inventory on hand, is just 365 ÷ turnover: 6× turnover ≈ 61 days of stock.
Inventory Turnover Calculator
Enter annual cost of goods sold and your average inventory value (both at cost).
Average inventory = (opening + closing stock) ÷ 2, or a monthly average if stock is seasonal. Healthy ecommerce range: roughly 4–8× per year.
Benchmarks and what they mean
Ecommerce working ranges
Most healthy ecommerce businesses land between 4× and 8× annually. Fashion and seasonal goods push 6–12×; furniture, jewellery and long-lead imports run 2–4×. Grocery and consumables run far higher. Compare within your vertical or not at all.
Low turnover (under ~3×)
Cash asleep: over-buying, bloated safety stock, or a tail of dead lines dragging the average. Check the distribution per SKU — a few 300-day corpses can bury twenty healthy products in the blended number.
High turnover (12×+ when peers run 6×)
Often celebrated, frequently a symptom: chronic under-buying and repeated stockouts also produce high turnover. If turnover is high and your stockout log is busy, you are not efficient — you are underwater with good posture.
The trend beats the level
Turnover drifting down quarter over quarter is the earliest broad signal of accumulating slow stock. Drifting up alongside stable availability is the signature of genuinely better buying.
How to improve turnover — without stockouts
Turnover improves from two directions. Sell more from the same stock: better listings, price moves, promoting slow lines, moving stock to the channel where it sells (see sell-through rate). Or hold less stock for the same sales: forecast-sized reorders, smaller and more frequent POs, clearing dead stock, and safety stock set by measured variability instead of habit.
The trap is improving turnover by simply buying less of everything — which buys a better ratio with stockouts on your winners. The honest fix is per-SKU discipline: aggressive cover on fast, predictable lines; lean cover on the tail; and dead stock cleared instead of averaged over. Replenagise runs exactly that discipline — demand forecasts, reorder points, and order quantities per SKU, synced live with Shopify and Linnworks — so turnover rises because buying got smarter, not because shelves got emptier.
Go deeper: clear the drag with our dead stock guide, track the daily version with days of inventory on hand, and let inventory forecasting software lift the ratio the honest way.
Inventory Turnover — FAQs
How do you calculate inventory turnover ratio?
Divide cost of goods sold by average inventory value (both at cost, same period): COGS ÷ ((opening stock + closing stock) ÷ 2). £300k COGS on £50k average stock = 6× turnover. Use revenue-based versions only for quick comparisons — cost-based is the accurate form.
What is a good inventory turnover ratio?
For ecommerce, 4–8× a year is a healthy working range; fashion and fast-moving categories run higher, big-ticket and long-lead-time goods lower. Judge against your vertical and your own trend — a rising ratio with stable availability is the real win.
Is a higher inventory turnover always better?
No. Beyond a point, high turnover is a stockout symptom: you are under-buying and losing sales, which flatters the ratio while starving revenue. The goal is the highest turnover you can hold while keeping your target availability on A-class SKUs.
How does turnover relate to days of inventory?
They are reciprocals: days of inventory on hand = 365 ÷ turnover. 6× turnover means about 61 days of stock; 12× means about 30. Use turnover for the annual health check and days-of-stock per SKU for day-to-day reorder decisions.
Turn Stock Faster — Without Running Dry
Per-SKU forecasts, reorder points, and automated POs that lift turnover the honest way — for Shopify and Linnworks.