Enter the cost of goods sold, beginning inventory, and ending inventory into the calculator. The calculator will evaluate and display the inventory turnover ratio.
- Asset Turnover Ratio Calculator
- Return on Assets Calculator (ROA)
- Days In Inventory Calculator
- Ending Inventory Calculator
Inventory Turnover Ratio Formula
The following formula is used to calculate an inventory turnover ratio.
I = COGS / [(BI + EI)/2]
- Where I is the inventory turnover ratio
- COGS is the cost of goods sold
- BI is the beginning inventory
- EI is the ending inventory
Inventory Turnover Ratio Definition
The inventory turnover ratio is a measure of how quickly a business can turn inventory into sales. The better the turnover ratio, the better the company is at converting on sales and moving inventory once it’s on the shelf.
Inventory Turnover Ratio Example
How to calculate an inventory turnover ratio?
- First, determine the COGS.
Calculate the total cost of goods sold.
- Next, determine the beginning inventory.
Calculate the beginning inventory value.
- Next, determine the ending inventory.
Calculate the ending inventory value.
- Finally, calculate the ITR.
Calculate the inventory turnover ratio using the equation above.
FAQ
What is an inventory turnover ratio?
An inventory turnover ratio is a measure of how quickly a business moves product from inventory to sales.
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