Inventory Turnover Ratio | Calculator & Formula for Inventory Turnover Ratio

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26 25.9 0 15.5-10.7 26.2-26.2 26.2-15.6 0-25.8-10.7-25.8-26.3zm40 .2c0-9.1-4.4-16.9-14.3-16.9-10 0-13.8 8.1-13.8 17.3 0 8.7 4.7 16.7 14.3 16.7 9.9-.1 13.8-8.6 13.8-17.1z"></path></svg> <span class="title-divider"></span> <div class="title"> <h1 class="tool-name">Inventory Turnover Ratio </h1> <a href="/inventory/?utm_source=inventory_turnover&utm_medium=backlink&utm_campaign=free_tools" rel="noopener noreferrer" class="powered-by"> by Zoho Inventory </a> </div> </div> <div class="d-flex align-items-center"> <a class="check-zoho-inventory" href="/inventory/?utm_source=inventory_turnover&utm_medium=backlink&utm_campaign=free_tools"> Check out Zoho Inventory </a> <div class="signupnow-buttons cta-btn"> <a id="banner-signup-button" href="/inventory/signup/?utm_source=inventory_turnover&utm_medium=backlink&utm_campaign=free_tools"> SIGN UP. IT'S FREE! </a> </div> </div> </div> </div> <div class="zom-header"> <div class="header-wrapper"> <div class="feature-heading"> <h1>How to calculate <div style="color: #950537;display: inline-block;"> Inventory Turnover Ratio</div> for your business?</h1> </div> </div> </div> <section class="feature-section"> <div class="feature clearfix"> <div class="content pull-right"> <h3><strong>Why do we use it?</strong></h3> <p>The inventory turnover ratio shows how effectively your inventory is managed. It reflects the two main components of a company's performance: <span class="yellow-text">stock purchase</span> and <span class="yellow-text">sales</span>.</p> </div> <div class="content pull-left"> <h3><strong>What is the inventory turnover ratio?</strong> <span class="popover-container"> <img class="popover-image" id="popover-trigger" src="/inventory/bep-calculator/images/help.svg"> <div class="popover-content hidden" id="popover-content"> <div class="arrow"></div> <div class="p-content"> <img id="popover-close" class="close-icon" src="/inventory/bep-calculator/images/remove.svg"> <div class="content-header">Inventory turnover ratio calculation</div> <div class="content-formula">Inventory turnover ratio = Cost of goods sold * 2 / (Beginning inventory + Final inventory)</div> </div> </div> </span> </h3> <p>The inventory turnover ratio is a measure of how many times your average inventory is "turned" or sold in a certain period of time. Put simply, the inventory turnover ratio indicates how many times you have managed to sell your entire stock in a year.</p> </div> </div> </section> <section class="feature-section"> <div class="feature clearfix"> <div class="pull-left content"> <h3><strong>Who needs this information?</strong></h3> <p>This information is useful to shareholders and business analysts, because the turnover ratio indicates the company's ability to sell its products. Inventory is any store's greatest asset and is often put up as collateral for loans, so creditors and banks are also very interested in knowing how easily the goods can be sold.</p> </div> <img class="feature-img pull-right" src="/inventory/inventory-turnover-ratio/turnover-ratio.svg" alt="How to calculate Inventory Turnover Ratio for your business? - Zoho Inventory"/> </div> </section> <div class="calculator big-display feature-section"> <div class="ripple"></div> <div class="input-section"> <div class="top-band"></div> <div> <div class="calculate-text-block"> <span class="calculate-text"><h4>Calculate your <span class="yellow-text">Inventory</span> Turnover ratio here</h4></span> </div> <div class="calculate-form-block"> <div> <span class="field cogs"> <p>Cost of Goods Sold</p> <input type="text" name="cogs" id="cogs" autofocus> </span> <span class="field beginning"> <p>Beginning Inventory</p> <input type="text" name="beginning" id="beginning"> </span> <span class="field ending"> <p>Ending Inventory</p> <input type="text" name="ending" id="ending"> </span> </div> <div style="text-align:center;"> <p class="error-text error-hidden">Please enter valid inputs for all the fields!</p> <span class="field calc-btn"> <button id="toratio-calc-button">Calculate</button> </span> </div> </div> </div> </div> <div class="results-section result-old-slide calc-result clearfix"> <div class="points-lhs output-lhs"> <h3>Your Inventory turnover ratio is</h3> <br> <h4 class="result result-text" id="result"></h4> <br> <div class="field calc-btn"> <button id="recalc-button">Recalculate</button> </div> </div> <div class="points-rhs ind-avg-section output-rhs"> <h3>Find out your industry average inventory turnover ratio</h3> <br> <select id="selectbox"> <option value="">Select Industry…</option> <option value="880.47">Consumer financial services</option> <option value="110.57">Professional services</option> <option value="59.16">Educational services</option> <option value="27.48">Consulting services</option> <option value="25.4">Hotels and tourism</option> <option value="16.05">Computer hardware</option> <option value="14.82">Grocery stores</option> <option value="13.27">Construction raw material</option> <option value="12.7">Pharmacy</option> <option value="11.33">Wholesale</option> <option value="7.15">Iron and Steel</option> <option value="6.45">Containers and Packaging</option> <option value="6.33">Electronic instruments and control</option> <option value="5.44">Retail Apparel</option> <option value="3.4">Computer peripherals</option> <option value="2.6">Laboratory instruments</option> <option value="2.59">Construction services</option> <option value="2.18">Print media and newspaper</option> <option value="5.76">Food processing</option> <option value="3.81">Chemical manufacturing</option> </select> <br> <br> <h4 class="result" id="average-ratio" style="max-width:none;"></h4> </div> </div> </div> <div class="points-section feature-section clearfix"> <div class="points-lhs"> <ul> <li class="points-title"> Here are some points to consider when looking at your business' inventory ratio: </li> <li> <span class="point-numbers one"></span> Having a lot of cash tied up in inventory is bad for the company. If you're in this position, you may need to convert the inventory into sales and free up some working capital. </li> <li> <span class="point-numbers two"></span> A low inventory turnover ratio may be due to overstocking or deficiencies in product manufacturing or marketing. Inventory has zero returns and high storage costs, so overstocking really doesn't help your business. </li> </ul> </div> <div class="points-rhs"> <ul> <li> <span class="point-numbers three"></span> <span>Stocking a large number of items that don't sell quickly could also mean that you end up with a warehouse full of obsolete products and don't have enough storage for the latest products.</span> </li> <li> <span class="point-numbers four"></span> However, a high turnover ratio does not always indicate a better performance. It can also mean that you have inadequate inventory, which leads to lost sales opportunities. </li> <li> <span class="point-numbers five"></span> Ordering insufficient quantities of your products can also cause you to miss out on bulk discounts and delivery savings. </li> </ul> </div> </div> <div class="strategies-section feature-section"> <div class="strategies-content clearfix"> <div class="points-lhs" style="border: none;"> <div class="secondary-header"> <div class="feature-heading"> <h4><strong>Strategies to improve sales of slow-moving products</strong></h4> </div> </div> </div> <div class="points-rhs"> <div class="block">Identify and markdown old products that are obsolete or no longer trending </div> <div class="block">Introduce discounts and product giveaways</div> <div class="block">Conduct contests and offer deals on social networks</div> <div class="block">Find ways to turn extra inventory into a tax write-off</div> </div> </div> </div> <div class="order-mgmt"> <section class="order-mgmt-footer"> <div class="order-mgmt-content"> <h4> How to achieve Ideal turnover ratio</h4> <p> The ideal inventory turnover ratio varies from business to business. The best solution is to adopt an inventory management system that can gather essential statistics, determine the economic order quantity, and find the perfect balance for your business. You can also find which products are selling best, maintain optimum stock levels, and even automate your stock management, so it is a great deal for any business. </p> </div> </section> </div> <style> .promotion-section { display: flex; flex-direction: column; padding: 80px 0 50px 0px; background-repeat: no-repeat; background-size: 100%; background-color: #fdeecf; text-align: center; } .zoho-inv-logo { width: 250px; height: 40px; } .btns { text-decoration: none; display: inline-block; padding: 6px 12px; margin-bottom: 0; font-size: 14px; font-weight: 400; line-height: 1.42857143; text-align: center; white-space: nowrap; vertical-align: middle; cursor: pointer; user-select: none; background-image: none; border: 1px solid transparent; border-radius: 4px; } .btn-mains { margin: 32px 0 40px; min-width: 200px; height: 45px; width: 100%; background-color: #f0483e; color: #ffffff; padding: 10px 20px; font-family: "Zoho Puvi SemiBold", -apple-system, BlinkMacSystemFont, "San Francisco", 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Inventory Turnover Ratio | Calculator & Formula for Inventory Turnover Ratio - Zoho Inventory