Free tool · Stock planning
Inventory Turnover Ratio Calculator
How many times did your stock sell and get replaced, and how many days does it sit before it sells
- Free
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- Indian rules
Cost of goods sold
· cost of revenue from operationsStock at cost
Period the figures cover
Gross profit
· optionalAlso show gross profit
Needs your revenue from operations (net sales) for the same period.
Results
Inventory turnover ratio
6 times
Stock was sold and replaced about 6 times in the year
Days of stock
60.8 days
Average holding period, on a 365-day period
How this was worked out
- Average stock = (₹14,00,000 + ₹18,00,000) ÷ 2 = ₹16,00,000
- Inventory turnover ratio = ₹96,00,000 ÷ ₹16,00,000 = 6 times
- Days of stock = 365 ÷ 6 = 60.8 days
- Gross profit = ₹1,20,00,000 − ₹96,00,000 = ₹24,00,000, which is 20% of revenue from operations
On average, stock stayed on the shelf for about 61 days before it was sold.
Reading the result
- A higher ratio means stock sells faster and less money is tied up in it. Fewer days of stock says the same thing.
- A low ratio can point to over-buying, slow-moving or obsolete stock. Look at item-wise movement to find which items sit longest.
- A very high ratio is not always good. It can mean stock-outs and lost sales, buying in very small lots, or selling cheaply to raise cash.
- There is no single good number. Compare with your own past periods and with businesses in the same industry, not across industries.
- Use cost of goods sold, not sales, and value stock at cost. Sales include your margin and make the ratio look higher.
- For a quarter or a month, the ratio is for that period only. Compare it with the same period length, not with a full year.
Estimate only. Average stock from two dates can hide seasonal peaks; if stock swings a lot during the year, an average of monthly closing stock gives a truer picture. The ratio is for the business as a whole and does not show which items are slow.
How it works
What this tool does.
Work out the inventory turnover ratio from cost of goods sold and opening and closing stock, the NCERT way. Get average stock, days of stock for a year, quarter or any period, and gross profit if you add your sales.
Enter cost of goods sold (called cost of revenue from operations in NCERT and Schedule III accounts), or switch to working it out from opening stock, net purchases, direct expenses and closing stock. Then enter opening and closing stock at cost and pick the period: a year of 365 or 360 days, a quarter of 90 days, or any number of days. The calculator takes average stock as the simple average of opening and closing stock, divides cost of goods sold by it to get the turnover ratio, and divides the days in the period by the ratio to get days of stock. Add revenue from operations to see gross profit and the gross profit ratio. Every step is shown with your numbers.
Rules and dates last reviewed: October 2026
Official sources
- NCERT: Class 12 Accountancy Part II, Chapter 5, Accounting Ratios (inventory turnover and gross profit ratio)
- ICAI Board of Studies: Intermediate Financial Management, Chapter 3, Financial Analysis and Planning: Ratio Analysis
- ICAI Board of Studies: Financial Management, Chapter 10, Management of Working Capital (stock storage period)
Inventory Turnover Ratio Calculator formula
Cost of goods sold = revenue from operations − gross profit, or opening stock + net purchases + direct expenses − closing stock. Average stock = (opening stock + closing stock) ÷ 2. Inventory turnover ratio = cost of goods sold ÷ average stock. Days of stock = days in the period (365 or 360 for a year) ÷ inventory turnover ratio, which is the same as average stock ÷ cost of goods sold per day. Gross profit ratio = gross profit ÷ revenue from operations × 100.
Worked example
A hardware distributor in Rajkot closes its books for 2025-26. Opening stock was ₹14,00,000, net purchases ₹97,50,000, freight inwards and unloading ₹2,50,000, and closing stock ₹18,00,000. Revenue from operations was ₹1,20,00,000.
- Cost of goods sold = ₹14,00,000 + ₹97,50,000 + ₹2,50,000 − ₹18,00,000 = ₹96,00,000
- Average stock = (₹14,00,000 + ₹18,00,000) ÷ 2 = ₹16,00,000
- Inventory turnover ratio = ₹96,00,000 ÷ ₹16,00,000 = 6 times
- Days of stock = 365 ÷ 6 = 60.8 days (60 days on a 360-day year)
- Gross profit = ₹1,20,00,000 − ₹96,00,000 = ₹24,00,000, a gross profit ratio of 20%
Stock turned over 6 times in the year. On average, goods sat in the godown for about 61 days before they were sold. To judge whether that is good, compare it with last year and with other hardware distributors, not with a grocery or a machinery maker.
Sleet ERP
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Questions
Inventory Turnover Ratio Calculator, answered.
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What is the inventory turnover ratio formula?
Inventory turnover ratio = cost of goods sold ÷ average inventory. NCERT Class 12 Accountancy calls the top figure cost of revenue from operations, which is revenue from operations less gross profit. Average inventory is the simple average of opening and closing stock: (opening + closing) ÷ 2. The answer is a number of times, such as 6 times a year.
How do I calculate the inventory turnover ratio?
First find cost of goods sold. If you do not have it ready, work it out as opening stock + net purchases + direct expenses such as wages and carriage inwards − closing stock. Next find average stock: add opening and closing stock and divide by 2. Then divide cost of goods sold by average stock. For example, ₹96,00,000 ÷ ₹16,00,000 = 6 times.
What is a good inventory turnover ratio?
There is no single good number. It depends on what you sell, so compare it with your own past years and with businesses in the same industry. A higher ratio usually means stock sells faster and less money is locked in it. NCERT warns that a low ratio can come from bad buying or obsolete stock, while a very high ratio may come from buying in small lots or selling quickly at a low margin, and can mean stock-outs and lost sales.
How do I convert inventory turnover into days?
Divide the days in the period by the turnover ratio. For a year, use 365 days, or 360 days if your CA or lender uses that convention. A ratio of 6 gives 365 ÷ 6 = 60.8 days. ICAI study material works it out as average stock ÷ cost of goods sold per day, which gives the same answer. For a quarter, use 90 days and the cost of goods sold for that quarter only.
Should I use sales or cost of goods sold for inventory turnover?
Use cost of goods sold. Stock is valued at cost, while sales include your profit margin, so dividing sales by stock makes the ratio look higher than it is. NCERT uses cost of revenue from operations, and ICAI study material notes that cost of goods sold takes the profit part out of turnover ratios.
What if I only have one stock figure?
NCERT says that when opening and closing inventory are not given separately, the one inventory figure is treated as average inventory. If your stock goes up and down a lot during the year, the average of opening and closing stock may not be typical, so treat the result as a rough guide.
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