Inventory Turnover Calculator (VND)
Inventory turnover tells you how many times in a year a business sells through and replaces its stock. You calculate it by dividing cost of goods sold (COGS) by average inventory. A higher ratio means goods move quickly and little cash is locked up in the warehouse; a lower ratio signals slow-moving or excess stock that ties up working capital and racks up storage, spoilage and obsolescence costs.
Its companion metric is days inventory outstanding (DIO) — the average number of days an item sits in stock before it sells, found by dividing 365 by the turnover ratio. For a business with 5.000.000.000 VND of annual COGS and 800.000.000 VND of average inventory, stock turns 6.25 times a year and the average item sits in the warehouse for about 58.4 days. Together these two numbers are a quick, powerful read on how efficiently a company runs its working capital.
The calculator above takes your cost of goods sold and average inventory and instantly returns the turnover ratio, days inventory outstanding, and a comparison against an illustrative benchmark. One thing to keep in mind: there is no single "good" number across industries. A fresh-grocery retailer turns inventory many times faster than a furniture or jewellery shop, yet both can be perfectly healthy. Always compare against your own prior periods and against direct competitors, not against an absolute target.
How the calculator works
Inventory turnover ratio
Turnover = Cost of goods sold (COGS) / Average inventory
| Symbol | Meaning |
|---|---|
| COGS | Cost of goods sold for the period (5.000.000.000 VND) |
| Average inventory | (Beginning inventory + Ending inventory) / 2 — here 800.000.000 VND |
| Turnover | Times the inventory is sold and replenished in a year |
Use COGS, not revenue. Revenue is recorded at selling price (which includes margin), while inventory is carried at cost — dividing revenue by inventory artificially inflates the ratio. Using average inventory rather than the period-end figure smooths out seasonal swings, such as a retailer building up stock before Tết.
Days inventory outstanding (DIO)
Days inventory = 365 / Turnover
This is the same information expressed differently, and it is often easier to picture: instead of "turns 6.25 times a year," you can say "the average item sits in stock for 58.4 days before it sells." High turnover means low days inventory, and vice versa.
How to read the numbers
- High turnover / low DIO: stock sells fast, little cash is trapped in inventory, and there is less obsolescence risk. But a ratio that is too high can mean you are understocking and losing sales to out-of-stocks.
- Low turnover / high DIO: slow-moving stock piles up, working capital is tied down, and storage and spoilage costs grow. Review your purchasing discipline and push sell-through.
- Compare like with like: the metric only means something against your own prior periods and against companies in the same sector. The 8.0x reference used in the tool is an illustration only, not an industry standard.
Worked example: a business with 5.000.000.000 VND of annual COGS
Suppose a shop reports cost of goods sold of 5.000.000.000 VND for the year and average inventory of 800.000.000 VND.
| Metric | Calculation | Result |
|---|---|---|
| Inventory turnover | 5.000.000.000 / 800.000.000 | 6.25 times/year |
| Days inventory outstanding (DIO) | 365 / 6.25 | 58.4 days |
| Illustrative benchmark | 365 / 8.0 | 45.6 days |
Three takeaways.
- Stock turns 6.25 times a year, meaning the entire inventory is sold and replaced about 6.25 times over twelve months. Each item sits in the warehouse for roughly 58.4 days before selling.
- Against the illustrative 8.0x benchmark (equivalent to 45.6 days of inventory), this business turns a little slower — stock sits about 12.8 days longer. In a fashion- or perishable-sensitive category, that is a flag worth acting on.
- Halve the inventory to 400.000.000 VND while holding the same sales, and turnover rises to 12.50 times/year with DIO falling to 29.2 days. The 400.000.000 VND of freed-up capital can be redeployed elsewhere — which is exactly why inventory management is a cash-flow lever, not just an operations metric.
Enter your own figures to see where you stand. To get the full picture of financial health, pair this with FiMo's ratio analyzer and profit margin calculators.
Frequently asked questions
What is inventory turnover and how do you calculate it?
Inventory turnover is the number of times a business sells through and replaces its stock in a year. You calculate it as cost of goods sold (COGS) divided by average inventory. Example: 5.000.000.000 VND of COGS against 800.000.000 VND of average inventory gives 5.000.000.000 / 800.000.000 = 6.25 times a year. The higher the ratio, the faster goods move and the less cash is locked up in stock.
What does days inventory outstanding (DIO) mean?
Days inventory outstanding (DIO) is the average number of days an item sits in stock before it sells, calculated as 365 divided by the turnover ratio. At a turnover of 6.25 times a year, DIO = 365 / 6.25 = 58.4 days. It is simply the turnover ratio expressed as a time period, which many managers find more intuitive: higher turnover means fewer days inventory, and vice versa.
Should I use COGS or revenue to calculate inventory turnover?
Use cost of goods sold (COGS), not revenue. Revenue is recorded at selling price, which includes your margin, while inventory is carried at cost. Dividing revenue by inventory inflates the ratio because the numerator and denominator are measured on different bases. Some older texts use sales, but the standard, like-for-like approach divides COGS by average inventory so both sides are stated at cost.
What is a good inventory turnover ratio?
There is no universal "good" number. A fresh-grocery retailer might turn inventory dozens of times a year, while a furniture or jewellery shop turns just a few times and is still healthy. The 8.0x reference used in this tool is an illustration only. The right comparison is against your own prior periods and against direct competitors. Too low signals dead stock; too high can mean understocking and lost sales from being out of stock.
How is average inventory calculated?
Average inventory = (Beginning inventory + Ending inventory) / 2. Using an average rather than the period-end figure smooths out seasonal swings — for example, a retailer that builds up heavily before Tết and then clears stock afterward. If you have monthly data, averaging all twelve months is more precise. In the example above, average inventory is 800.000.000 VND.
How can I improve my inventory turnover?
The goal is to sell faster without running out of stock. Levers include ordering closer to real demand using sales data, clearing slow movers with promotions, negotiating smaller and more frequent deliveries with suppliers, and pruning weak SKUs. As an illustration: tightening inventory from 800.000.000 VND to 400.000.000 VND while holding sales steady raises turnover from 6.25 to 12.50 times a year and cuts days inventory to 29.2 days.