Inventory turnover = COGS / Average Inventory. Higher is better — it means less cash tied up in stock.
Retail average: 4–6× per year. Grocery: 20+×. Luxury goods: 1–2×.
Use this calculator when preparing for a business decision that depends on this metric. Calculating the figure in advance — rather than estimating — prevents the kind of imprecision that leads to suboptimal choices.
Many business metric errors arise from using the wrong time period for the calculation. Annualising a figure from a seasonal month, or averaging a figure that changes over time, can produce misleading results that don't reflect steady-state performance.
A marketing manager calculates campaign ROI: £15,000 spend, £72,000 in attributed revenue, 35% gross margin. Net profit from the campaign: £10,200. ROI: 68%. The figure justifies the budget allocation and provides the benchmark for the next campaign.
Industry-dependent. Grocery: 20+. Retail: 4–6. Auto dealers: 8–12. Furniture: 3–4.
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