Calculate inventory months on hand from current inventory and average monthly usage or period COGS, with days on hand and run-out date.

Use matching quantity units, or the same cost basis and currency.

Run-out estimate

Defaults to today. Run-out dates assume constant usage and no replenishment.

Related Calculators

Inventory Months On Hand Formula

The following formula is used to calculate inventory months on hand for a given period, where COGS is the total cost of goods sold over that period (not a monthly rate).

IMH = (CI / COGS) × N

Variables:

  • IMH is the inventory months on hand
  • CI is the current inventory value (typically measured at cost)
  • COGS is the total cost of goods sold during the period N (same cost basis and currency as CI)
  • N is the length of the period in months

To calculate inventory months on hand, divide the current inventory by the total COGS for the period, then multiply by the number of months in the period. (This is equivalent to dividing inventory by the average monthly COGS, which is COGS ÷ N.)

What is Inventory Months On Hand?

Inventory months on hand is a metric that estimates how many months your current inventory (typically valued at cost) would last if you continue selling/using inventory at the same pace as the average cost of goods sold (COGS) over a chosen period. It is useful for inventory management and cash-flow planning. In practice, some companies use average inventory over the period for a smoother measure, while using current inventory provides a point-in-time snapshot.

How to Calculate Inventory Months On Hand?

The following steps outline how to calculate the Inventory Months On Hand.

  1. First, determine the current inventory (CI), typically valued at cost.
  2. Next, determine the cost of goods sold (COGS) for the same period you will use in N.
  3. Next, determine the number of months in the period (N).
  4. Finally, calculate the Inventory Months On Hand using the formula IMH = (CI / COGS) * N.
  5. After inserting the values and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

Current Inventory (CI) = $5,000

Cost of Goods Sold (COGS) = $12,000 (total over the period)

Number of Months in Period (N) = 6 months

Inventory Months On Hand (IMH) = (5,000 / 12,000) * 6 = 2.5 months