# Inventory Turnover Ratio Calculator

Key in theCost of goods Solds (COGS) and Inventory Values to the respective fields given below and then click Calculate to get the desired result.

##### Inventory Turnover Ratio Calculator - Glossary:
Using our inventory turnover ratio calculator, helps to compare, measure, understand the overall health of the business.

##### Inventory Turnover Ratio:
Shows the proportion of Cost of Goods Sold (COGS) to Average Inventory. In simple words, is a key measure for evaluating how efficient the business is at managing its inventory and generating sales.

##### How to calculate?
Formula: Inventory Turnover Ratio = Cost of Goods Sold (COGS)/Average Inventory
The values are commonly stated against accounts inventory in the balance and net sales in income statement.
Note:
Average Inventory = (Beginning Inventory + Ending Inventory)/2

##### Cost of Goods Sold (COGS):
Cost of goods sold (COGS) is total cost to produce goods and services such as cost of materials, wages and other expenses related to producing a goods and service.

##### Inventory:
Inventory is the finished goods that can be sold immediately.

##### Average Inventory:
An average of Inventory value at the beginning of the year and inventory value at the end of the year.

##### Example:
A company with a cost of goods (COGS) of \$225,000, beginning inventory of \$20,000 and ending inventory of \$25,000 will have inventory turnover ratio of 10 times. It means that the company sold its entire inventory within 36.5 days period. It is an accounting ratio that helps a company to determine how much of its money tied up in inventory.