How fast your stock sells,and when to reorder.
Inventory turnover is the speed your cash moves through the shelf. Too slow and your money is frozen in boxes; too fast and you're losing sales to empty bins. Enter your numbers to get your turnover ratio, how many days of stock you're sitting on, and the exact reorder point that refills before you run dry.
Your numbers
What the goods you sold this year actually cost you — at cost, not retail.
Average value of stock on hand, at cost. (Beginning + ending) ÷ 2 is the quick version.
Total units you moved across the year — sets your daily sales velocity.
Days from placing a reorder to having it back on the shelf.
Buffer days you want on hand to absorb demand spikes and late deliveries.
The verdict
Inventory turnover
6.00×
Days of inventory
61
Days a unit sits before it sells.
Reorder point
690
Reorder once stock drops to this.
Daily sales velocity
33
Units you move per day.
Reorder point, broken out
Where you land (turns / year)
Reverse-solve · hit a target turnover
Inventory to hold
$40,000
Room to add
$0
At $240,000 of COGS, a 6.0× turnover means carrying $40,000 in average inventory — right where you are now. That target lands at 61 days of inventory.
Sensitivity · the cost of carrying
Less stock, faster turns
| Avg inventory | Turnover | Days of inventory |
|---|---|---|
| $20,000 | 12.00× | 30 |
| $30,000 | 8.00× | 46 |
| $40,000 | 6.00× | 61 |
| $50,000 | 4.80× | 76 |
| $60,000 | 4.00× | 91 |
| $80,000 | 3.00× | 122 |
Same $240,000 of sales, different stock levels. Carrying less inventory lifts turnover and cuts the days your cash sits idle — the gain is real until you start stocking out of your best sellers.
Reference · general turnover bands
What the ratio is telling you
| Band | What it means |
|---|---|
| Under 2× | Capital is asleep on the shelf — overstocked, slow, or carrying dead SKUs |
| 2× to 4× | Sluggish for most retail — cash is tied up longer than it needs to be |
| 4× to 6× | The typical healthy band for general retail and DTC |
| 6× to 12× | Fast — lean stock, tight cash cycle; watch for stockouts |
| Above 12× | Very fast (grocery / perishables territory) — guard against running dry |
General operator rules of thumb, not a published dataset — turnover swings hard by category. Read these against your own margins and lead times.
Your move
The shelf is hiding cash. I find it and free it.
Inventory turns 6.00×/yr (61 days of stock), reorder at 690 units.
Send me your catalogue and the sell-through behind these numbers. I'll show you which SKUs are trapping cash, where your reorder points are set wrong, and the moves that get your inventory working without risking your best sellers. Free, and the plan is yours whether you hire me or not.
Plain English
Turnover is how many times a year your shelf pays for itself.
Inventory turnover is the number of times you sell through and replace your average stock in a year. Divide your annual cost of goods sold by your average inventory value and you get the ratio: a turnover of 6 means the entire shelf cleared and refilled six times. It's the cleanest read on how hard your inventory dollars are working.
The number cuts both ways. A low turnover means cash is trapped in product that isn't moving — every slow SKU is money you can't spend on ads, payroll, or the next launch, plus the storage, insurance, and obsolescence that come with holding it. A very high turnover looks efficient, but pushed too far it means you're selling out and turning away buyers because the bin was empty when they showed up.
Flip the ratio and you get days of inventory: 365 ÷ turnover, the average number of days a unit sits before it sells. Pair that with your supplier lead time and you can compute the reorder point — the stock level that triggers your next order early enough to land before you run dry. That's what this calculator does: it turns one ratio into an operating plan.
The formula
Turnover = COGS ÷ Avg Inventory · Days of Inventory = 365 ÷ Turnover · Reorder Point = Daily Units × (Lead Time + Safety Stock)
$240,000 COGS on $40,000 average inventory → turnover = 6×, so the shelf clears six times a year and a unit sits ~61 days before selling. At 12,000 units a year that's ~33 units a day; with a 14-day lead time plus 7 days of safety stock you reorder once stock drops to ~691 units — early enough to refill before the shelf goes empty.
What turnover should look like
Healthy turnover is wildly category-dependent — groceries spin 15×+ on purpose while furniture lives happily at 2–3×. As a general retail rule of thumb, 4–6× is the comfortable middle: fast enough to keep cash moving, slow enough to avoid constant stockouts. The bands below are operator rules of thumb, not a published dataset — read them against your own category and margins.
| Turnover | What it means |
|---|---|
| Under 2× | Capital is asleep on the shelf — overstocked, slow, or carrying dead SKUs |
| 2× to 4× | Sluggish for most retail — cash is tied up longer than it needs to be |
| 4× to 6× | The typical healthy band for general retail and DTC |
| 6× to 12× | Fast — lean stock, tight cash cycle; watch for stockouts |
| Above 12× | Very fast (grocery / perishables territory) — guard against running dry |
General operator bands — not a published dataset. Turnover is deeply category-specific; read these against your own margins, lead times, and stockout risk.
Your turnover came back off. Here's the read.
Turnover under ~4.
Cash is sleeping on the shelf. Audit for dead SKUs, mark down or liquidate aging stock, and cut reorder quantities on the slow movers. Tighten purchasing to demand, not optimism — you're financing inventory that isn't earning.
Turnover above ~12 with stockouts.
You're efficient to the point of leaking sales. Raise safety stock, shorten the reorder cycle, or find a faster supplier. A lost sale costs more than a few extra days of holding — protect availability on your best sellers.
Healthy ratio but cash still tight.
The blended number can hide the problem. A few fast SKUs can mask a long tail of dead stock. Break turnover down per SKU and clear the bottom decile — that's where the trapped cash usually is.
Turnover fine but you keep running out.
Your reorder point is set too low or your lead time is longer than you think. Recompute the trigger with realistic lead time plus a safety buffer, and reorder on the level, not the calendar.
Eight ways to move turnover the right direction
01Kill the dead SKUs
The bottom 10–20% of products often tie up a third of the cash. Liquidate them and redeploy the money into what actually sells.
02Buy to demand, not to comfort
Over-ordering 'to be safe' is the single biggest turnover killer. Size reorders to real sell-through, not a round number.
03Set a reorder point per SKU
Trigger on stock level, not the calendar. The reorder point this tool computes refills just in time instead of early.
04Shorten supplier lead time
Faster suppliers let you hold less stock for the same service level. Negotiate lead time as hard as you negotiate price.
05Move slow stock with bundles
Pair a slow SKU with a fast one or a discount. Turning aging inventory into cash beats writing it down later.
06Forecast seasonality
Don't carry summer stock through winter. Match inventory to the demand curve so cash isn't parked off-season.
07Protect the best sellers
Higher safety stock on your top movers prevents the stockouts that quietly cost more than the holding does.
08Watch days of inventory, not just the ratio
Days of inventory is the same truth in a unit you can act on — aim to shrink it without triggering stockouts.
The vocabulary
- Inventory turnover
- COGS ÷ average inventory: how many times a year you sell through and replace your stock. Higher means cash moves faster.
- Days of inventory
- 365 ÷ turnover: the average number of days a unit sits on the shelf before it sells. Lower is leaner.
- Reorder point
- The stock level that triggers your next order: daily sales × (lead time + safety stock). Hit it and you reorder.
- Lead time
- Days from placing a reorder to having the goods back on the shelf and sellable.
- Safety stock
- Buffer inventory held to absorb demand spikes and late deliveries so you don't stock out mid-cycle.
- Daily sales velocity
- Annual units sold ÷ 365: how many units you move per day, the input that sizes your reorder point.
Inventory turnover questions, straight answers
For general retail, 4 to 6 turns a year is the comfortable band — fast enough to keep cash moving, slow enough to avoid constant stockouts. But it's deeply category-specific: grocery and perishables run 15×+ by design, while furniture and jewellery sit happily at 2–3×. The honest target is 'faster than last quarter, without selling out of your best movers.'
Keep going
A calculator tells you what. A call tells you what to do about it.
Send me the account behind these numbers. I'll tell you straight where the money's leaking and what I'd fix first — free, and you keep it whether you hire me or not.