What is the inventory days formula?

[Winter]

Can someone explain the inventory days formula and how it’s calculated? I want to understand how to measure how long inventory is held before being sold and why this metric is important for business performance.

 

[liam]

Inventory days is computed as (Average Inventory/Cost of Goods Sold) 365 and this only informs you how many days the products in the stores take before they get sold. It is important because the lower the inventory days the more the sales are likely to be quicker, there is also cash flow and the money is not tied up in inventory.

 

[Maverick Stone]

The most common Inventory Days (or Days Sales of Inventory, DSI) formula is:

Inventory Days = {Average Inventory}/{Cost of Goods Sold) X Days in Period

Where Days in Period is typically 365.

 

[Oscar]

The inventory days calculation formula is: Inventory Days = (Average Inventory ÷ Cost of Goods Sold) × 365. This represents the days the inventory takes to be sold.

 

[Jarwish]

Inventory Days (Days Inventory Outstanding, DIO) is calculated as:

Inventory Days = Average Inventory

Cost of Goods Sold × 365 Inventory Days = Cost of Goods Sold

Average Inventory ×365

It measures how many days, on average, inventory is held before being sold.

 

[Shane John]

Inventory Days indicates the period of holding stock and selling. It is computed in the form of (Average Inventory/ Cost of Goods Sold) x 365.