Free Inventory Turnover Ratio Calculator
Optimize your inventory management with our comprehensive turnover calculator. Analyze your inventory efficiency, improve cash flow, and make data-driven decisions with AI-powered insights.
Inventory Turnover Calculator
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What is Inventory Turnover and Why Does it Matter?
Inventory turnover is a crucial efficiency metric that measures how many times your business sells and replaces its inventory over a specific period. It's a key indicator of operational efficiency, demand forecasting accuracy, and cash flow management.
For most retail businesses, a healthy inventory turnover ratio ranges from 4-6 times per year, though this varies significantly by industry. Fast-moving consumer goods may turn over monthly, while luxury items might turn over just once or twice annually.
How Do You Calculate Inventory Turnover?
Inventory Turnover Formula
Higher ratios indicate more efficient inventory management
Industry Benchmarks
Grocery/Food
High turnover due to perishable goods
Retail Clothing
Seasonal variations affect rates
Electronics
Fast product cycles drive turnover
Automotive
Higher-value items with longer cycles
Furniture
Lower turnover due to higher prices
Luxury Goods
Premium positioning, slower turnover
Frequently Asked Questions
What is a good inventory turnover ratio?
It varies by industry, but 4-6 times per year is common for retail.
Can inventory turnover be too high?
Yes, extremely high turnover may indicate stockouts or inadequate inventory levels.
Does inventory turnover affect profitability?
Yes, efficient turnover reduces carrying costs and improves cash flow.
How often should I calculate turnover?
Monthly or quarterly calculations help track trends and make timely adjustments.