Inventory Turnover Calculation Formula tells you how many times your business has sold and replaced its inventory during a given period of time. It is an important metric because it reveals whether or not the inventory you have is being used efficiently. To calculate Inventory Turnover, simply divide the Cost of Goods Sold (COGS) by the average inventory at cost: Inventory Turnover = COGS/Average Inventory at cost. Knowing your inventory turnover rate will help you make informed decisions about ordering, stocking, and selling materials. With the right strategies, you can ensure that you’re maximizing your profits and minimizing waste.