Inventory Turns and Carrying Cost Calculator for Infor XA
Inventory turns are the quickest way to show what stock is costing a business. This calculator turns two numbers from your Infor XA reports into turns, days on hand, carrying cost and the cash a better turn rate would free.
Your numbers
Use COGS at cost, not sales revenue.
Average of period-end balances over the year, at cost.
Your results
Illustrative arithmetic. Reaching a target requires real reductions in stock, not only a change in the ratio.
Carrying cost at target vs turns
Sweeps Target turns per year from 2 to 15, holding your other inputs fixed.
Excess and slow stock report
Optional: we can identify slow movers and excess quantities from your ERP using read-only access.
Optional. The tool and every export work without this. No spam.
How to use it
Take annual cost of goods sold from the income statement and average inventory from monthly balances in the inventory valuation report. Enter a carrying cost rate and the turns you want to reach. The tool returns current turns, days on hand, the annual cost of holding the stock, and the cash and savings at your target. Use finished goods, work in process and raw material combined first, then repeat per category.
- Use average inventory, not a single month
- Keep COGS and inventory both at cost
- Run raw, WIP and finished goods separately
- Exclude consigned stock you do not own
The formula behind it
Turns equal cost of goods sold divided by average inventory. Days on hand is 365 divided by turns. Carrying cost is average inventory times the carrying rate, which should cover capital, storage, handling, insurance, shrinkage and obsolescence. Inventory at a target is COGS divided by the target turns, and the difference from today's average is the cash that could be released if the lower level is sustained.
Reading the result
A turn rate by itself means little without context, because aerospace and defense parts with long lead times legitimately turn slowly. Compare against your own trend and similar plants. The released-cash figure is a ceiling, not a forecast, since safety stock, lead times and batch sizes limit how far stock can drop. The chart shows diminishing returns: moving from 2 to 4 turns frees much more than moving from 10 to 12.
Common mistakes
Do not divide revenue by inventory, which overstates turns. Do not use year-end inventory if there is seasonality or a recent write-down. Avoid chasing a turn target by cutting stock below safety levels, which moves cost into expediting and late orders. Also check for obsolete or excess items in the average: they depress turns but need disposal, not better planning.
Frequently Asked Questions
What is a good inventory turn rate?
It depends on industry, product mix and lead times. High-mix build-to-order plants may turn 3 to 6 times, repetitive manufacturers more. Benchmark against your own history and direct peers.
Should I use cost or selling price?
Use cost for both COGS and inventory. Mixing sales value in the numerator or denominator makes the ratio inconsistent and overstates performance.
What carrying cost rate should I assume?
Many companies use a figure between roughly 15% and 30%, built from cost of capital, storage, insurance, handling and obsolescence. Use the rate your finance team approves.
Is the cash release guaranteed?
No. It is the arithmetic result if inventory falls to the target without hurting service. Real reduction depends on supplier lead times, demand variability and planning discipline.
If you want slow and excess stock identified from your own XA or other ERP data, with the query visible, we can help set that up.
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