Free tool
Inventory turnover calculator
See how many times you sell through your inventory each year and how many days a dollar of stock sits on your shelf.
The inventory turnover formula
Example: $120,000 of COGS in a year with average inventory of $28,000 is a turnover of 4.3x. Each dollar of stock sits for about 85 days before it sells.
Why it matters for a Shopify store
Low turnover means cash stuck on shelves. High turnover is good until it turns into stockouts. The goal isn't the highest number, it's buying close to what you'll actually sell before the next delivery arrives. That's what a reorder point per SKU gives you.
Turnover is a store-wide average and hides the detail. A few slow SKUs can drag it down while best-sellers run out. Check it by product too: see sell-through rate and dead stock.
FAQ
What is a good inventory turnover ratio for ecommerce?
It depends on the category. Fast-moving consumables often turn 8 to 12 times a year, while apparel and home goods commonly sit around 3 to 6. Compare against your own history and your category rather than one universal number.
What is the inventory turnover formula?
Cost of goods sold for the period divided by average inventory value at cost for the same period. Average inventory is usually (starting inventory + ending inventory) / 2.
How do I improve inventory turnover?
Order smaller quantities more often, cut or discount slow sellers, and set reorder points from real sales velocity so you stop over-buying products that don't move.
Let SteadyShelf do this math for every SKU
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