Your Results
Average Inventory Value
—
The average value of inventory held during the period.
Inventory Turnover Ratio
—
How many times inventory was sold and replaced during the period. A higher number indicates faster sales.
Days of Inventory on Hand
—
The average number of days it takes for a company to sell its inventory. A lower number indicates quicker sales.
How This Calculator Works
The tool calculates inventory turnover by dividing the Cost of Goods Sold (COGS) by the average inventory value for a specific period. It then determines the days of inventory on hand by dividing 365 days by the calculated inventory turnover ratio.
When to Use This Tool
A snack brand launches a new flavor and wants to see how quickly it's moving off the shelves compared to established products.
Reveals if the new product is meeting sales velocity expectations or if adjustments to production or marketing are needed.
A beverage company notices a particular SKU is consistently overstocked in their warehouse, leading to high storage costs.
Identifies if the SKU's turnover is below industry benchmarks, indicating potential overproduction or declining demand.
A frozen food brand prepares for holiday season demand and needs to manage inventory efficiently to avoid spoilage and stockouts.
Helps determine optimal stock levels to meet peak demand without incurring excessive holding costs post-season.
Common Questions
What is considered a good inventory turnover ratio for CPG products?
A 'good' ratio varies by CPG category. Perishable goods like fresh produce will have much higher turnover (e.g., 50+) than shelf-stable items (e.g., 6-12). Generally, a higher ratio means more efficient sales.
How can I improve my CPG brand's inventory turnover?
Focus on accurate demand forecasting, optimizing order quantities, reducing lead times, and implementing effective sales and marketing promotions to move products faster through the supply chain.
Why is tracking inventory turnover crucial for CPG brands?
It directly impacts cash flow, storage costs, and product freshness. High turnover means less capital tied up in inventory, reduced risk of obsolescence, and fresher products reaching consumers, enhancing brand reputation.
Optimize Inventory, Boost Cash Flow Today.
Guidance provides CPG operators with actionable insights and tools to make data-driven decisions, ensuring your products are always in the right place at the right time.
Apply for Early Access