Inventory turnover measures how many times cost of sales used the average inventory balance during a period; days inventory converts that pace into average days held. Cost of sales of $360,000 and average inventory of $90,000 produce 4.00 turns per year and about 91.25 days of inventory using 365 divided by 4.00.
What inventory turnover vs days inventory means
Inventory turnover is cost of sales divided by average inventory for the period, while days inventory is the period days divided by inventory turnover. Turnover expresses pace per period; days inventory expresses the reciprocal pace as an average holding-time indicator.
| Cost of sales | $360,000 per year |
|---|---|
| Average inventory | $90,000 |
| Inventory turnover | 4.00 turns/year |
| Days inventory | 91.25 days |
| Period basis | 365 days |
Inventory turnover vs. days inventory: how are the two measures connected?: worked example
A retailer starts the year with $80,000 of inventory and ends with $100,000, so average inventory is $90,000. With $360,000 of annual cost of sales, turnover is 4.00: $360,000 divided by $90,000. Days inventory is 365 divided by 4.00, or 91.25 days. A 4.00-turn result does not mean a specific item waited exactly 91.25 days; it is an average based on period totals.
How to calculate inventory turnover vs days inventory
Average inventory = (beginning inventory plus ending inventory) divided by 2 for this simple two-point model. Inventory turnover = cost of sales divided by average inventory. Days inventory = 365 divided by annual turnover, or use the matching number of days for a shorter measured period.
Use the relevant inputs with these related Calculatort pages: inventory turnover calculator · cash burn context · profit margin calculation.
Check the inventory turnover vs days inventory inputs before deciding
stock ledger review 1. A stock ledger record reads days inventory at 91.25 days with period basis at 365 days, then asks whether the purchase season uses the same period and unit. The physical count is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the stock ledger evidence with the purchase season record before revising this result.
purchase season review 2. A purchase season record reads period basis at 365 days with cost of sales at $360,000 per year, then asks whether the physical count uses the same period and unit. The obsolete item is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the purchase season evidence with the physical count record before revising this result.
physical count review 3. A physical count record reads cost of sales at $360,000 per year with average inventory at $90,000, then asks whether the obsolete item uses the same period and unit. The reorder point is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the physical count evidence with the obsolete item record before revising this result.
obsolete item review 4. A obsolete item record reads average inventory at $90,000 with inventory turnover at 4.00 turns/year, then asks whether the reorder point uses the same period and unit. The stockout risk is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the obsolete item evidence with the reorder point record before revising this result.
reorder point review 5. A reorder point record reads inventory turnover at 4.00 turns/year with days inventory at 91.25 days, then asks whether the stockout risk uses the same period and unit. The warehouse balance is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the reorder point evidence with the stockout risk record before revising this result.
stockout risk review 6. A stockout risk record reads days inventory at 91.25 days with period basis at 365 days, then asks whether the warehouse balance uses the same period and unit. The cost layer is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the stockout risk evidence with the warehouse balance record before revising this result.
warehouse balance review 7. A warehouse balance record reads period basis at 365 days with cost of sales at $360,000 per year, then asks whether the cost layer uses the same period and unit. The supplier lead time is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the warehouse balance evidence with the cost layer record before revising this result.
cost layer review 8. A cost layer record reads cost of sales at $360,000 per year with average inventory at $90,000, then asks whether the supplier lead time uses the same period and unit. The demand forecast is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the cost layer evidence with the supplier lead time record before revising this result.
supplier lead time review 9. A supplier lead time record reads average inventory at $90,000 with inventory turnover at 4.00 turns/year, then asks whether the demand forecast uses the same period and unit. The write-down record is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the supplier lead time evidence with the demand forecast record before revising this result.
demand forecast review 10. A demand forecast record reads inventory turnover at 4.00 turns/year with days inventory at 91.25 days, then asks whether the write-down record uses the same period and unit. The count date is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the demand forecast evidence with the write-down record record before revising this result.
write-down record review 11. A write-down record record reads days inventory at 91.25 days with period basis at 365 days, then asks whether the count date uses the same period and unit. The stock ledger is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the write-down record evidence with the count date record before revising this result.
count date review 12. A count date record reads period basis at 365 days with cost of sales at $360,000 per year, then asks whether the stock ledger uses the same period and unit. The purchase season is the evidence that turns this illustration into a decision record: it can confirm the input, expose an omitted cost or rule, or show that the comparison does not apply. Keep the count date evidence with the stock ledger record before revising this result.
Common mistakes
Do not divide sales revenue by inventory when the chosen formula uses cost of sales, combine a monthly cost figure with annual inventory without annualizing, or compare seasonal businesses using different measurement dates.
Where this calculation stops
Physical counts, valuation method, obsolete stock, consignment, returns, seasonality, and the definition of cost of sales can change the measure. A faster turn is not automatically better if stockouts lose sales.
Source and verification
The U.S. Securities and Exchange Commission defines inventory turnover as cost of sales divided by average inventory for the period. Read the named source. Verify the source date and the controlling statement, agreement, payroll record, or accounting record before relying on the illustrated result.