Efficiency benchmark · 20 sectors
Inventory Turnover by Industry (2024 Benchmarks)
Inventory turnover varies from under 3x for aerospace and pharma to over 20x for Energy commodity traders — a 7-fold spread driven by cycle length, product type, and business model rather than management quality alone. This table shows the sector median and typical range (in turns per year) for 11 GICS sectors so you can judge whether a company's inventory efficiency is strong, normal, or lagging relative to its industry. Use the inventory turnover calculator to compute it for any ticker, or screen the market with the inventory turnover screener.
2024 data · 20 sectors
Inventory Turnover Benchmarks by Sector
| Sector | Median | Typical Range | Context |
|---|---|---|---|
| Technology | 8x | 4x–15x | Hardware and semis at 8x–14x; software companies carry near-zero physical inventory. |
| Healthcare | 5x | 2x–10x | Large pharma at 5x–8x on 90–180 day cycles; biotech and device makers at 2x–6x. |
| Retail (General) | 6x | 3x–12x | Department stores and specialty retail turn 4x–8x; discount chains reach 10x–12x. |
| Grocery / Food Retail | 15x | 8x–25x | High-velocity perishables and fast-moving staples drive the fastest turns in retail. |
| E-commerce | 12x | 5x–20x | Marketplace models with third-party fulfillment reach 15x–20x; owned inventory at 5x–10x. |
| Consumer Discretionary | 5x | 2x–10x | Specialty apparel at 3x–5x; auto parts and home improvement at 5x–8x. |
| Consumer Staples | 8x | 4x–14x | CPG manufacturers at 5x–9x on longer production runs; household goods at 8x–12x. |
| Industrials | 5x | 2x–9x | Aerospace and defense at 2x–4x on long-cycle programs; tools and components at 7x–9x. |
| Auto & Vehicles | 8x | 4x–14x | Auto OEMs turn 8x–12x; dealerships near 4x–6x on slower-moving lot inventory. |
| Semiconductors | 4x | 2x–8x | Long design cycles and fab lead times slow turns; fabless companies closer to 6x–8x. |
| Energy | 15x | 8x–25x | Refined products and commodity traders turn 15x–25x; E&P companies near 8x–12x. |
| Materials / Chemicals | 6x | 3x–10x | Specialty chemicals at 7x–9x; bulk commodity producers at 3x–5x depending on cycle. |
| Pharmaceuticals | 3x | 1x–7x | Long shelf-life drugs and regulatory batch requirements drive slow inventory cycles. |
| Aerospace & Defense | 3x | 1x–6x | Multi-year program timelines and specialized WIP keep turnover structurally low. |
| Food & Beverage | 10x | 5x–18x | Packaged food at 8x–12x; beverage companies with broad distribution reach 14x–18x. |
| Apparel / Luxury | 3x | 1x–6x | Luxury brands deliberately limit turns to preserve scarcity; fast fashion reaches 5x–6x. |
| Construction | 6x | 3x–10x | Project-based cycle length determines turns; materials suppliers faster than contractors. |
| Logistics / Transportation | 10x | 5x–18x | Freight and parcel operators cycle supplies and fuel quickly; asset-light platforms faster. |
| Utilities | 5x | 2x–10x | Fuel and materials stockpiles cycle at varying rates; capital equipment is fixed, not inventory. |
| Real Estate (REITs) | 20x | 10x–35x | Property developers turn lots quickly in active markets; REITs hold assets, not traditional inventory. |
What Is a Good Inventory Turnover Ratio?
Inventory turnover measures how many times a company sells and replaces its inventory in a year. The formula is simple: Inventory Turnover = COGS / Average Inventory. A reading of 8x means the company cycled through its entire stock roughly every 45 days. But “good” depends almost entirely on the sector — a 5x reading is excellent for an aerospace manufacturer and alarming for a grocery chain.
Above 10x — Efficient or commodity-driven. Utilities and Energy companies dominate the top of this table because they cycle physical commodities (fuel, refined products) very rapidly. For manufacturers and retailers, turns above 10x typically reflect lean inventory practices, fast product cycles, or strong demand. The risk at very high turns is stockout: too little inventory on hand to fill customer orders without delay.
5x to 10x — Healthy for most operators. The majority of well-run manufacturers, consumer companies, and tech hardware businesses operate in this band. Turns in this range balance carrying costs against service levels without tying up excess cash in slow-moving stock. Pair with the inventory turnover calculator to track whether a company is moving toward or away from its sector median.
Below 3x — Slow-moving or long-cycle by nature. Aerospace, defense, and heavy industrial companies legitimately run at 3x or below because their products take months or years to complete. For a consumer goods company or retailer, however, turns below 3x often flag overstocking, declining demand, or supply-chain inefficiency. Complement with Days Inventory Outstanding (365 / Turnover) to express the same metric in days on hand.
How to Use This Data
1. Benchmark within sector, not across sectors
A Consumer Discretionary retailer at 5x and a Utility at 5x are in very different positions. The retailer at 5x is close to its 5.2x sector median — healthy. The Utility at 5x is far below its 14.2x median and warrants scrutiny of fuel and materials management. Always compare to the row that matches the company's primary business. Use the inventory turnover calculator to compute a live reading and benchmark it here.
2. Trend matters more than the snapshot
A single turnover reading tells you where the company stands today; the trend over 4–8 quarters tells you where it is heading. Turns declining faster than revenue can flag inventory accumulation ahead of a demand slowdown — a classic early warning signal. Turns rising sharply can indicate lean operations or, if extreme, a risk of stockout. Watch the trend alongside gross margin: if turns rise while gross margin falls, the company may be discounting to clear stock.
3. Pair with gross margin and cash conversion
High inventory turnover is only valuable if gross margin is preserved. The best operators turn inventory fast and maintain pricing discipline — the combination drives free cash flow. Pair the turnover figure with Days Sales Outstanding and Days Payable Outstanding to build a full cash conversion cycle view. The inventory turnover screener lets you filter for companies above or below a sector threshold across the whole coverage universe.
Common questions
Inventory turnover by industry — answered directly.
What is a good inventory turnover ratio by industry?
Context is everything — 5x is healthy for an aerospace manufacturer but alarming for a grocery chain. For most manufacturers and retailers, 5x–10x is a healthy range. Grocery and food retail regularly exceed 12x–15x due to perishables velocity. Pharmaceuticals and luxury goods legitimately run at 2x–4x because long shelf life, batch manufacturing, and deliberate scarcity are structural features, not inefficiency. Always compare against the sector row in the table above, not a universal threshold.
How is inventory turnover calculated?
Inventory Turnover = COGS / Average Inventory. Average Inventory = (Beginning Inventory + Ending Inventory) / 2. Use COGS — not revenue — to avoid overstating turns in high-markup businesses. Many analysts also express the same metric as Days Inventory Outstanding (DIO = 365 / Inventory Turnover), which converts turns into the average number of days inventory sits on the shelf before it is sold.
Does high inventory turnover always mean a company is efficient?
Not always. Very high turns can indicate stockout risk — the company is selling faster than it can replenish. They can also reflect an asset-light model (software, digital goods) where the metric loses analytical meaning. The best signal is turns trend over time within the same company: rising turns alongside stable or improving gross margin is a strong positive. Rising turns with falling gross margin may mean discounting to clear slow-moving stock.
Why do Grocery and Energy have the highest inventory turnover?
Grocery retailers handle perishables and fast-moving staples that must move within days or weeks — a structural velocity advantage over nearly every other sector. Energy companies cycle refined petroleum products and commodity stockpiles that are consumed continuously by end users. Both sectors benefit from predictable demand, commodity pricing, and very short holding periods. The metric captures physical velocity, not operational superiority over sectors with longer product cycles.
Related Tools & Resources
Inventory Turnover Calculator
Compute COGS / Average Inventory for any ticker and benchmark against the sector medians above.
Inventory Turnover Screener
Filter the market for companies above or below a sector inventory turnover threshold.
Working Capital Calculator
Pair inventory efficiency with liquidity — compute current assets minus current liabilities for any ticker.
Working Capital by Industry
The companion liquidity benchmark — working capital as a percentage of revenue by sector.
Deep analysis · any ticker
See how a company's inventory turnover compares — and what it means.
Basis Report generates a decision-ready analysis: inventory turnover trend, days inventory outstanding, sector benchmark comparison, and working capital efficiency flags — all in one document.
Generate a free report