# Oracle Fusion Inventory Turns and Carrying Cost Calculator

> Source: https://netray.co/tools/oracle-fusion-inventory-turns-carrying-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compute inventory turns and days on hand from COGS and average inventory, then see the cash and carrying cost released by a higher target.

## Category

supply-chain

## Erp

Oracle Fusion Cloud SCM

## Audience

- Oracle Cloud consultant
- Supply chain manager
- Finance controller

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Annual cost of goods sold

**Key:** cogs

**Type:** number

**Default:** 48000000

**Min:** 0

**Step:** 500000

**Unit:** $

#### Average inventory value

**Key:** avg_inv

**Type:** number

**Default:** 9500000

**Min:** 0

**Step:** 100000

**Unit:** $

**Help:** Average of period-end inventory valuation, not a single snapshot.

#### Annual carrying cost rate

**Key:** carry

**Type:** number

**Default:** 24

**Min:** 0

**Max:** 60

**Step:** 1

**Unit:** %

#### Target inventory turns

**Key:** target_turns

**Type:** slider

**Default:** 8

**Min:** 2

**Max:** 20

**Step:** 0.5

**Unit:** turns/year

**Outputs:**

#### Current inventory turns

**Key:** turns

**Expr:** cogs / avg_inv

**Format:** decimal

**Primary:** true

#### Days inventory on hand

**Key:** dio

**Expr:** 365 / turns

**Format:** days

#### Current annual carrying cost

**Key:** carry_cost

**Expr:** avg_inv * carry / 100

**Format:** currency

#### Inventory at target turns

**Key:** target_inv

**Expr:** cogs / target_turns

**Format:** currency

#### Cash released at target

**Key:** cash

**Expr:** max(0, avg_inv - target_inv)

**Format:** currency

**Primary:** true

#### Annual carrying cost saved

**Key:** saving

**Expr:** cash * carry / 100

**Format:** currency

**Chart:**

#### Cash released vs target turns

**Type:** line

**X:** target_turns

**From:** 2

**To:** 20

**Steps:** 18

**Series:**

- cash

**Disclaimer:** Turns depend on how COGS and average inventory are defined. Use consistent periods and the same cost basis for both numbers.

## Content

**Intro:** Inventory turns tell finance and operations how fast stock converts to sales. The inputs come straight from valuation and cost of goods sold reports in Oracle Fusion, so this calculator takes two numbers you already have and shows what a better turn rate is worth.

**Sections:**

#### How to use it

**Body:** Enter annual cost of goods sold and the average inventory value over the same year. Averaging month-end balances is better than one snapshot, since year-end counts are often unusually low or high. Add a carrying cost rate that includes capital, storage, insurance, shrinkage and obsolescence. Then move the target turns slider. The tool shows current turns, days on hand, the inventory level at the target and how much cash and annual carrying cost that releases.

#### The formulas

**Body:** Turns equal cost of goods sold divided by average inventory. Days on hand equals 365 divided by turns. Inventory at a target equals COGS divided by the target turns, so the cash release is the gap between current and target inventory. Carrying cost saved is that cash times the carrying rate. These are simple but they expose a lot: raising turns from 5 to 8 on a 48 million COGS base cuts inventory by roughly a third.

**Bullets:**

- Turns = COGS / average inventory
- Days on hand = 365 / turns
- Cash released = current inventory - COGS / target turns

#### Cautions

**Body:** A single company-wide turn figure hides wide differences between raw material, work in process and finished goods, and between A and C items. Compare the same categories over time, and do not chase turns at the expense of service level or lead time protection. Raising turns by cutting safety stock without shortening lead times will increase stockouts. Use the result to pick the categories and sites where stock is excessive, then work those items individually.

**Cta:** If you want turns and excess stock calculated by item and warehouse directly from Oracle data, we can build that view. It is optional, and the calculator stands alone.

**Faq:**

#### Which COGS and inventory figures should I use?

**Answer:** Use annual cost of goods sold from the income statement or cost reports, and average inventory valued at the same cost basis. Include raw material, work in process and finished goods unless you are analyzing a single category.

#### What is a good turn rate?

**Answer:** It depends heavily on the industry. High-mix, long-lead-time manufacturers such as aerospace may see 3 to 5 turns, while repetitive consumer goods can exceed 10. Compare against your own history and similar companies, not a universal number.

#### How should I set the carrying cost rate?

**Answer:** Add the cost of capital, storage and handling, insurance and taxes, shrinkage and obsolescence. Total rates of 20% to 30% of inventory value per year are common in manufacturing. Obsolescence is often the largest piece.

#### Is released cash real?

**Answer:** Only if you can reduce the stock without hurting service. Part of the gap may be obsolete or slow items that can be sold at a loss. Treat the figure as an upper bound on opportunity, then validate by item.

## Search terms

inventory turns calculator, days inventory outstanding calculator, inventory carrying cost calculator, oracle fusion inventory valuation report, cash released from inventory reduction, inventory turnover ratio formula, target inventory turns, working capital inventory what if

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