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How is inventory turn rate calculated?
How is inventory turn rate calculated?
Bill C. avatar
Written by Bill C.
Updated over a week ago

The inventory turn rate is calculated by dividing the cost of goods sold for a period by the average inventory for that period. Average inventory is calculated by adding the beginning and ending inventory and dividing by two.

For example:

Beginning Inventory: 169,062
Ending Inventory: 121,654
Average Inventory: 145,358
Cost of Goods Sold: 79,286

79,286 / 145,358 = .55 turns

The numbers for beginning and ending inventory depend on the date range you have selected on the report. So, you can view turn over the course of weeks, months, or years.

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