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SyteLine Inventory Carrying Cost and Turns Calculator

Inventory is often the largest working capital item for a manufacturer, and turns are the quickest health check. This calculator converts your valuation and cost of goods sold into turns, days on hand and the cost of the stock you hold.

Your numbers

Average inventory value

Average of period end balances, from your inventory valuation report.

Annual cost of goods sold

Cost of capital

Storage and handling

Insurance and taxes

Shrink and obsolescence

Target turns per year

Your results

Current inventory turns

5.3333

Cash released at target

$600,000

Days inventory on hand

68 days

Total carrying rate

17.5%

Current yearly carrying cost

$315,000

Inventory at target turns

$1,200,000

Yearly carrying cost at target

$210,000

Carrying rates vary widely by company. Replace the defaults with figures agreed with finance.

Save results:

Yearly carrying cost vs target turns

Sweeps Target turns per year from 2 to 20, holding your other inputs fixed.

Excess inventory scan

Optional: we can scan your SyteLine data for items with no recent usage and a large stock value.

Optional. The tool and every export work without this. No spam.

How to use it

Take average inventory value from your SyteLine inventory valuation or the balance sheet, and annual cost of goods sold from the income statement. Enter the components of your carrying cost: capital, storage, insurance and taxes, and shrink or obsolescence. Pick a target turn rate to see how much cash would be released and what the carrying cost falls to. Use the chart to compare target levels.

Use an average of several months, not one snapshot
Exclude consigned stock you do not own
Consider separate runs for raw, WIP and finished goods

Definitions

Turns equal cost of goods sold divided by average inventory. Days on hand equal 365 divided by turns. Carrying cost rate is the sum of the percentage components, and the yearly cost equals inventory value times that rate. Cash released is the gap between current inventory and the inventory implied by the target turns. Typical discrete manufacturers sit anywhere from 3 to 10 turns depending on lead times and product mix, so compare with your own history first.

Interpreting and acting

A low turn rate points to excess, obsolete or slow moving stock, long supplier lead times or oversized lot sizes. Cash released is a ceiling, not a promise, since service levels and safety stock constrain how far you can go. Pair this with an ABC and excess review, then fix the causes in item parameters: lot sizes, safety stock and planning policies, instead of one time write downs.

Do not chase turns by starving critical long lead parts
Include obsolescence reserves in the rate if you book them
Re-run quarterly to track progress

Frequently Asked Questions

Which inventory value should I use?

Use the average over the period, ideally monthly balances, valued at standard or actual cost consistent with your cost of goods sold. A single spike month can mislead.

What is a typical carrying cost rate?

Many manufacturers use 15 to 30% of value per year, but it depends on your cost of capital, storage and obsolescence experience. Agree the figure with finance.

Should WIP be included?

It can be, but WIP turns are driven by lead time and are fixed by shop floor flow. Many teams analyse raw material, WIP and finished goods separately.

Is higher always better?

No. Very high turns can signal stockouts, expedite costs or lost sales. Aim for the level your service targets and lead times support.

If you want turns and excess stock analysed from live SyteLine item and transaction data by item class, we can build that view for you.

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