The ratio and the days figure explained with invented kitchen numbers, the inputs a restaurant already keeps, and a payment check before a bigger order.
How to Calculate Inventory Turnover Ratio: Reading the Result Before a Second Location
To calculate the inventory turnover ratio, divide the cost of goods sold for a period by the average inventory over the same period. Average inventory is the opening count plus the closing count, divided by two.
| Line | Value |
|---|---|
| Cost of food and beverage sold | $412,000 |
| Opening inventory count | $14,600 |
| Closing inventory count | $17,200 |
| Average inventory | $15,900 |
| Inventory turnover ratio | 25.9 times |
| Inventory turnover days | 14.1 days |
Before a second location, the owner can check whether the first kitchen turns its stock steadily. A ratio that falls from one year to the next means food is sitting longer on the shelf.
How to Calculate Inventory Turnover Days: Reading the Result Before a Bulk Food Order
Turnover days divide the period by the ratio: 365 divided by 25.9 gives about 14.1 days in the example. That is the average time a dollar of food spends on the shelf before it is used.
A bulk food order raises the closing count. Illustration only, invented figures: if the kitchen closes the year with $28,200 on hand instead of $17,200, average inventory rises to $21,400, the ratio drops to 19.3 and turnover days climb to 19.0.
Inventory Turnover Ratio Calculator: Figures Restaurant Owners Already Keep
Every input already sits in a restaurant’s books. These figures are worked by hand; the calculator on this page takes three different inputs, an amount, an annual rate and a term, and returns the monthly payment, total interest and total repaid.
| Input | Where it comes from |
|---|---|
| Cost of goods sold | The profit and loss statement for the period |
| Opening inventory | The stock count on the first day of the period |
| Closing inventory | The stock count on the last day |
| Period length | 365 for a year, or the days in a shorter period |
| Order amount | The supplier invoice for a larger order |
| Rate and term | A funding partner’s offer, or a test figure of your own |
Reading the Inventory Turnover Ratio Calculator Result Before a Larger Supplier Order
Read the turnover result first, then the payment. Illustration only, invented figures: a supplier order of $12,000, financed over 9 months with an 11.75% annual rate, carries a $1,399.46 monthly payment. Counted by hand from that rounded figure, interest totals $595.14 and the amount repaid $12,595.14; the calculator on this page works from the unrounded payment, so the totals it shows can sit a cent lower.
If turnover days stay short, the order sells through well inside the nine months and the payment comes from the food it bought. If they stretch, a smaller order or a credit line draw sized to each delivery can fit better.
Run the numbers twice before you call or send the request form: once at the turnover you have now, and once at the slower turnover the bigger order would bring. If the slower case still leaves room for the payment after rent, payroll and the regular food bill, the order is on firm ground. If it does not, split the order across two deliveries or ask the supplier for longer terms, and run the figures again.
By Swiftbridge Lending Group · Updated