Cash flow & working capital

Inventory turnover and days on hand calculator

Inventory turnover shows how many times you sell and replace stock in a year. Slow turns quietly consume the cash that funds growth, and they age into write-offs.

Inputs

Result

Inventory turns per year

6x

Days inventory on hand
60.83
Annual holding cost
USD 60,000
Inventory needed at target turns
USD 225,000
Cash released at target
USD 75,000
Holding cost saved
USD 15,000
  • Slow-moving stock is the most common source of trapped cash in product businesses.

How to use this calculator

  1. 1Enter annual cost of goods sold and average inventory value.
  2. 2Set your holding cost rate and a target number of turns.
  3. 3Read the cash that reaching the target would release.

Turns, days and holding cost

Turnover = cost of goods sold / average inventory. Days on hand = 365 / turnover. Six turns means roughly 61 days of stock sitting on shelves at any moment.

Holding cost — capital, storage, insurance, shrinkage and obsolescence — typically runs 18-25% of inventory value per year, so excess stock is far more expensive than the interest cost alone.

Fixing slow turns

Rank SKUs by contribution and turns. The bottom quartile usually holds a disproportionate share of the cash; clearing it at a discount is almost always cheaper than carrying it another year.

Then reorder more often in smaller quantities where supplier terms allow. Order frequency, not order size, is what raises turns.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/inventory-turnover-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"cogs":1800000,"averageInventory":300000,"holdingCostPercent":20,"targetTurns":8,"currency":"USD"}'

Frequently asked questions

Should I use revenue or COGS?

COGS. Using revenue mixes margin into the ratio and overstates turns, which makes benchmarking meaningless.

What turnover is normal?

Grocery and fast fashion can exceed 10-12 turns; general retail 4-6; industrial distribution and equipment dealers 2-4.

How do I treat consignment stock?

Exclude stock you do not own from average inventory, but include the related COGS only when you actually record the sale.