Calculate the inventory turnover ratio, an efficiency ratio that measures how quickly a company sells its inventory.

The inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) by the average inventory value. It indicates how many times a company’s inventory is sold and replaced over a period. A higher inventory turnover ratio suggests that a company is effectively managing its inventory by quickly converting it into sales.

The formula is as follows:

\[\text{Inventory Turnover Ratio} = \text{Cost of Goods Sold} / \text{Average Inventory}\]

Also known as: stock turnover ratio.

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Calculate the Inventory Turnover Ratio in Python

The Inventory Turnover Ratio is available in the Ratios module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_inventory_turnover_ratio as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

inventory_turnover_ratios = toolkit.ratios.get_inventory_turnover_ratio()

Which returns:

  2021 2022 2023 2024 2025
AAPL 40.0303 38.7899 37.9777 30.8955 33.9834
TSLA 8.1593 6.5185 5.9787 6.2582 6.3692

Parameters

get_inventory_turnover_ratio accepts the following parameters:

  • rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
  • growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
  • lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
  • standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
  • trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.
Asset Turnover Ratio Days of Inventory Outstanding Days of Sales Outstanding Operating Cycle Accounts Payables Turnover Ratio Days of Accounts Payable Outstanding Cash Conversion Cycle Cash Conversion Efficiency Receivables Turnover SGA to Revenue Ratio Fixed Asset Turnover Operating Ratio

The Ratios module page introduces the module, and the sidebar lists all of its functions.

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