Inventory Turnover Ratio

Efficiency

Updated Apr 2026 • Has calculator

How many times a company sells and replaces its inventory during a period.

What is Inventory Turnover?

The Inventory Turnover Ratio divides Cost of Goods Sold (COGS) by average inventory to measure how many times a company cycles through its stock in a year. A high ratio indicates lean inventory management and strong demand; a very high ratio may signal stockout risk. A low ratio suggests slow-moving inventory or overstocking, tying up capital. Ratios vary enormously by industry — grocers may turn inventory 20+ times per year, while aircraft manufacturers may turn it less than once.

Formula

Inventory Turnover = COGS ÷ Average Inventory

Worked Example

FY2024

Step 1 Cost of goods sold FY2024: $210,352M

Step 2 Average inventory: ($7,286M + $6,331M) ÷ 2 = $6,809M

Step 3 Inventory Turnover = $210,352M ÷ $6,809M = 30.89x

Step 4 → Apple replaces its entire inventory roughly every 12 days

Source: Apple 10-K FY2024 (2024-11-01)

Calculate Inventory Turnover

Cost of Goods Sold (COGS)

Total cost of goods sold for the period, in millions of USD

Average Inventory

Average of beginning and ending inventory, in millions of USD

Inventory Turnover

—

Not investment advice.

How to Interpret Inventory Turnover

< 4

Low — slow-moving stock or heavy capital tied in inventory

4 – 12

Average — typical for manufacturing and consumer goods

12 – 25

High — efficient supply chain management

> 25

Very High — lean inventory, strong demand or just-in-time

📚 Working Capital — Complete the path

Sources