Sep 10, 2025 · Inventory turnover ratio measures how efficiently a company uses its inventory by dividing the cost of goods sold by the average inventory value during a set period.

You can calculate the inventory turnover ratio by dividing the inventory days ratio by 365 and flipping the ratio. In this example, the inventory turnover ratio = 1 / (73/365) = 5.

Jun 27, 2025 · To find your inventory turnover ratio, use this formula: Inventory turnover ratio = Cost of goods sold ÷ Average inventory. A higher ratio means your products sell quickly or you’re keeping …

Feb 7, 2024 · Simply put, the inventory turnover ratio measures the efficiency at which a company can convert its inventory purchases into revenue. The inventory turnover ratio is calculated by dividing …

Nov 14, 2025 · Annual cost of goods sold ÷ Inventory = Inventory turnover. A more refined measurement is to exclude direct labor and overhead from the annual cost of goods sold in the numerator of the …

Jun 20, 2025 · Inventory turnover is usually calculated as Cost of Goods Sold (COGS) divided by Average Inventory. In other words, it’s the number of times your business “turns over” its inventory in …

Nov 13, 2024 · This calculator computes your inventory turnover ratio based on your beginning and ending inventory and cost of goods sold for the period.

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. Master the essentials of financial planning and analysis with our comprehensive course. Delve into key topics such as capital …

In this article, you'll learn what the inventory turnover ratio is, how to calculate and interpret it, and how to use it to drive better decisions for inventory control and financial performance.

Feb 24, 2025 · Once you’ve calculated those two metrics, use them in this formula to get your inventory turnover: Cost of Goods Sold (COGS) / Average Inventory = Inventory Turnover. Note that this metric …