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Inventory Turn Time Calculator

Inventory turnover

Turn time indicates the duration that a business takes for selling a particular product. Inventory turnover is a measuring method that helps you know the exact number of times your inventory has been turned in the past 12 months.

The formula used for calculating inventory turn time online is:

Inventory Turn Time = Cost of Goods Sold from Stock Sales during the Past 12 Months/ Average Inventory Investment during the Past 12 Months

Formula Notes:

  • The cost of goods shipped from a warehouse inventory is only included in the inventory turnover while the direct shipments or special orders are not included.
  • You can calculate the inventory turnover based on the acquisition cost (what you pay for the item) and not on the selling price.

To determine your average inventory investment:

  • Every month, the total value of each product in inventory should be calculated (quantity on-hand times cost) on the same day. Constant costing methods can also be used for COGS and average inventory investment.
  • If you find many variations in your inventory level, then the total inventory value should be calculated on the first and fifteenth day of each month.

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