Accounting Inventory Turnover (Monthly) Calculator
Calculate your monthly inventory turnover rate, average inventory balance, and estimated days of inventory on hand.
Overview
This monthly inventory turnover calculator estimates how often your average inventory was sold or used during a month. Enter beginning inventory, ending inventory, monthly cost of goods sold, and the number of days in the month to review turnover and inventory days on hand.
How it works
The calculator first finds average inventory by adding beginning and ending inventory and dividing by two. It then divides monthly cost of goods sold by average inventory to calculate inventory turnover. A higher turnover means inventory moved through more frequently, while a lower turnover may indicate slower movement or higher stock levels. Days inventory on hand is calculated by dividing the number of days in the month by the turnover rate.
How to use this calculator
- 1Enter the inventory value at the beginning of the month.
- 2Enter the inventory value at the end of the month.
- 3Add the cost of goods sold recorded for the month.
- 4Select the number of days in the month.
- 5Review the turnover rate, average inventory, and estimated days on hand.
Example Calculation
Beginning inventory value
$50,000
Ending inventory value
$40,000
Monthly cost of goods sold
$180,000
Days in month
30
Monthly inventory turnover
4.00 times
With average inventory of 45,000 and monthly cost of goods sold of 180,000, inventory turnover is 4.00 times and estimated inventory on hand is 7.5 days.
Frequently asked questions
What is monthly inventory turnover?
Monthly inventory turnover shows how many times average inventory was sold or used during one month. It is calculated using monthly cost of goods sold divided by average inventory.
Should I use sales revenue or cost of goods sold?
Use cost of goods sold. Inventory is normally valued at cost, so using sales revenue can overstate turnover because it includes the sales margin.
How is average inventory calculated?
This calculator uses beginning inventory plus ending inventory, divided by two. A business with large swings during the month may prefer an average based on more frequent inventory balances.
What does a high inventory turnover mean?
A high rate generally means inventory is moving quickly relative to the average amount held. The appropriate rate depends on the industry, product shelf life, seasonality, and stock availability goals.
What are days inventory on hand?
Days inventory on hand estimates how many days inventory is held on average before it is sold or used, based on the selected month and calculated turnover rate.
Can I compare turnover across different months?
Yes, provided you use a consistent inventory valuation method and the same cost of goods sold basis. Consider seasonal sales patterns and unusual stock purchases when comparing months.
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Assumptions and warnings
Assumptions
- Beginning inventory, ending inventory, and cost of goods sold use the same inventory valuation basis.
- Cost of goods sold reflects inventory sold or consumed during the selected month, rather than sales revenue.
- Average inventory is calculated as the simple average of beginning and ending balances.
- Results are planning and performance estimates and do not account for stock movements within the month.
Warnings
- This calculator provides an accounting performance estimate only and is not financial or accounting advice.
- Interpret turnover alongside seasonal demand, stock availability targets, returns, write-downs, and product mix.