Stock turnover and average days in stock, with every step shown.
Stock turnover (times in the period)
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Enter what was sold and your stock figures to see the turnover.
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Enter the cost of goods sold for a period and the value of your stock at the start and the end of it. You get the average stock, the stock turnover (how many times your stock was sold and replaced) and the average number of days an item stays in stock, with the workings. It also works in units, for a single product, and can work out the cost of goods sold from your purchases.
By value, enter every amount at cost, never at selling price, or your margin inflates the result. If you are VAT-registered, leave out the VAT you reclaim. In units, count in items, kilos or litres, but always in the same unit. If you do not know your cost of goods sold, choose ‘From purchases’: it is your purchases for the period adjusted for opening and closing stock, the adjustment HMRC asks for in box 17 of the full self-employment pages of a tax return if you use traditional accounting rather than the cash basis.
Opening and closing stock come from your stock counts; a company that deals in goods must keep statements of the stock it holds at the end of each financial year. The period is 365 days unless you change it: use about 91 for a quarter, or the number of days in the month.
A turnover of 6 over a year means your average stock was sold and replaced six times. The average days in stock tells you how long an item sits on the shelf before it sells. The higher the turnover and the shorter the days, the less cash your stock ties up. The average stock is rounded to the nearest penny, the turnover to two decimal places and the days to one, with halves rounded up. Copy the workings, export them as a CSV file or save them to Priostack.
Average stock = (opening stock + closing stock) ÷ 2.
Cost of goods sold = purchases + opening stock − closing stock.
Stock turnover = cost of goods sold ÷ average stock.
Average days in stock = average stock ÷ cost of goods sold × days in the period, which is also days in the period ÷ turnover.
In units, units sold take the place of the cost of goods sold, and the average stock is counted in units.
The average stock is (£12,000 + £8,000) ÷ 2 = £10,000. If the shop bought £50,000 of stock during the year, its cost of goods sold is £50,000 + £12,000 − £8,000 = £54,000. Its stock turnover is £54,000 ÷ £10,000 = 5.4, and an item stays in stock for £10,000 ÷ £54,000 × 365 = 67.6 days on average.
Divide the cost of goods sold for the period by the average stock, also at cost. The average stock is the average of opening and closing stock. £48,000 of goods sold at cost with an average stock of £4,000 gives a turnover of 12: the stock is replaced about every 30 days (365 ÷ 12 = 30.4).
Use figures on the same footing. For tax, HMRC accepts stock valued at the lower of cost and net realisable value, so compare it with what the goods cost you, not with sales. Dividing sales by stock at cost mixes selling prices with cost prices: if you sell at twice the cost, your stock looks as if it turns twice as fast as it does.
That is the average days in stock: average stock ÷ cost of goods sold × the days in the period, or simply the days in the period ÷ turnover. Over a 365-day year, a turnover of 5 means 73 days. The calculator works from the average stock and the cost of goods sold rather than from a rounded turnover, which can move the answer by a day.
Enter the cost of goods sold and the stock figures for that period, and its length in days. The turnover is for that period: 1.5 over a quarter is about 6 over a year. The average days in stock is in days whatever the period, so you can compare it directly.
There is no single good figure: a shop selling fresh food replaces its stock far more often than a jeweller or a spare-parts dealer. Compare your turnover with your own past periods and with businesses in your sector. A falling turnover often points to slow-moving lines or to buying more than you sell.
Yes. The calculation is plain arithmetic on your own figures, and the duty for companies to keep year-end stock statements comes from the Companies Act 2006, which applies across the UK.
This calculator gives general information, not legal, tax, financial or accounting advice. The result depends on the figures you enter: for your accounts or an important decision, ask your accountant.
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