[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on” da_disable_devices=”off|off|off”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n
Managing inventory<\/a> is never an easy task, but always a necessary one. Depending on the types of goods and products you work with, storage and handling costs will differ. In other words, the requirements for a restaurant and a bookstore are quite different. Additionally, your business model will also affect inventory turnover. A bookstore that focuses on bestsellers and popular fiction is likely to use up inventory at a very different rate than a rare-book store.<\/p>\n The inventory turnover ratio shows how frequently a business consumes its inventory. In this article, you will learn to calculate the inventory turnover ratio and how to convert this value so it\u2019s expressed in days. Finally, you will see examples of how to calculate this ratio using Excel or Google Sheets.<\/p>\n [\/et_pb_text][et_pb_text module_id=”what-is-inventory-turnover” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n Inventory turnover shows how quickly a company uses its inventory. The inventory turnover ratio indicates how many times inventory was replenished during a specific timeframe. This value can also be recalculated so that it is expressed in days.<\/p>\n There are different methods available to find the inventory turnover ratio, using net sales or cost of goods sold (COGS). However, the latter is usually preferred, as using the value for COGS provides a more accurate result. When comparing ratio values, remember to check whether they were calculated using the same method. Values calculated using net sales can be significantly and misleadingly higher.<\/p>\n [\/et_pb_text][et_pb_text module_id=”what-is-a-good-inventory-turnover-ratio” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n A high ratio indicates that your products sell well since inventory is used quickly. However, too high a value could indicate a higher likelihood of stock shortages<\/a>. A low ratio can indicate low sales or overstocking. However, what \u201chigh\u201d and \u201clow\u201d means will vary significantly by industry and business model.<\/p>\n Generally speaking, higher values are preferred by all interested parties. However, the values themselves change drastically depending on various factors. If you work with intangibles, inventory turnover can be exceptionally high. For example, the finance and service sectors have the highest averages for inventory turnover.<\/p>\n [\/et_pb_text][et_pb_text module_id=”how-to-calculate-inventory-turnover” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n To calculate the inventory turnover ratio, divide the cost of goods sold (COGS), which you’ll find on your income statement<\/a>, for a given period by the average inventory for that same period. The average inventory can be calculated by adding the beginning and end inventories for the period and dividing by 2.<\/p>\n You can use whatever timeframe you prefer, but it\u2019s common to use yearly, quarterly, or monthly data. You can use the following formula to calculate inventory turns for a given period of time.<\/p>\n inventory turnover ratio = COGS \/ average inventory<\/p>\n<\/blockquote>\n where<\/p>\n average inventory = (beginning inventory + end inventory) \/ 2<\/p>\n<\/blockquote>\n You can also quickly convert this to obtain the number of days a turn takes. Use the following formula to calculate the number of days it takes to use up the inventory:<\/p>\n average days to sell inventory = 365 \/ inventory turnover ratio<\/p>\n<\/blockquote>\n As you can see, inventory turnover is a useful financial ratio. It provides insight into how well a company sells its products and manages its inventory. However, you need to recalculate this periodically to make real use of this information. By analyzing the data, you can investigate any unexpected values and uncover potential inventory problems.<\/p>\n In other words, this is not something you should attempt to do manually. Fortunately, tools like Excel and Google Sheets let you create templates<\/a> to standardize and automate these calculations. In fact, by connecting Excel or Google Sheets with Sheetgo, an AI-powered data automation platform, you can automate inventory management and control, from collecting data from multiple users to sharing the final reports automatically.<\/p>\n In the next section, you have examples of how to calculate inventory turnover ratios using Google Sheets.<\/p>\n [\/et_pb_text][et_pb_text module_id=”inventory-turnover-examples” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n The following examples show how you can calculate inventory turns and inventory days using Google Sheets. A time period of 1 year is used in both of the examples below.<\/p>\n [\/et_pb_text][et_pb_text module_id=”example-1-car-dealership” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n In this example, I will calculate the inventory turnover ratio for a car dealership<\/a>, as well as how many days a turn takes.<\/p>\n The first step is to gather the required data in your spreadsheet. You\u2019ll need the amounts for COGS, beginning inventory, and end inventory for the period you\u2019re interested in.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/inventory-turnover-car-dealership-data.webp” alt=”Inventory turnover formula \u2014 COGS, beginning inventory and end inventory for a car dealership in Google Sheets” title_text=”COGS, beginning inventory and end inventory for a car dealership in Google Sheets” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n To calculate the average inventory, add the beginning and end inventories, then divide by 2.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/average-inventory-formula-car-dealership.webp” alt=”Average inventory formula \u2014 =(B3+B4)\/2 typed in cell B5 for the car dealership” title_text=”=(B3+B4)\/2 typed in cell B5 for the car dealership” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n To find the inventory turnover ratio, divide the value of COGS by the value of average inventory.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/inventory-turnover-ratio-formula-car-dealership.webp” alt=”Inventory turnover ratio formula \u2014 =B2\/B5 in cell B6, dividing COGS by average inventory” title_text=”=B2\/B5 in cell B6, dividing COGS by average inventory” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n As you can see, the car dealership\u2019s inventory turnover ratio is 12.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/inventory-turnover-ratio-car-dealership-result.webp” alt=”Inventory turnover ratio \u2014 12.0 in cell B6 for the car dealership” title_text=”12.0 in cell B6 for the car dealership” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n To get the average number of days it takes to turn over inventory, divide 365 by the inventory turnover ratio.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/inventory-days-formula-car-dealership.webp” alt=”Inventory days formula \u2014 =365\/B6 typed in cell B7 for turnover days” title_text=”=365\/B6 typed in cell B7 for turnover days” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n That\u2019s it. There are approximately 12 inventory turns per year, which means inventory is renewed about once a month.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/static.sheetgo.com\/wp-content\/uploads\/2026\/10\/inventory-days-car-dealership-result.webp” alt=”Inventory days \u2014 30.4 turnover days in cell B7 for the car dealership” title_text=”30.4 turnover days in cell B7 for the car dealership” align=”center” _builder_version=”4.22.2″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text module_id=”example-2-restaurant” _builder_version=”4.22.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\nWhat is inventory turnover?<\/h2>\n
What is a good inventory turnover ratio?<\/h2>\n
How to calculate inventory turnover?<\/h2>\n
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How to calculate inventory turnover in Excel or Google Sheets?<\/h3>\n
Inventory turnover examples<\/h2>\n
Example 1. Car dealership<\/h2>\n
1. Gather data<\/h3>\n
2. Calculate average inventory<\/h3>\n
3. Calculate inventory turns<\/h3>\n
4. Calculate inventory days<\/h3>\n
Example 2. Restaurant<\/h2>\n