Days in inventory
Encyclopedia
Days in inventory is an efficiency ratio that measures the average number of days the company holds its inventory before selling it.
The formula for DII is:
where the average inventory is the average of inventory levels at the beginning and end of an accounting period, and COGS/day is calculated by dividing the total cost of goods sold per year by 365 days.
The formula for DII is:
where the average inventory is the average of inventory levels at the beginning and end of an accounting period, and COGS/day is calculated by dividing the total cost of goods sold per year by 365 days.
See also
- Working capital analysisWorking capitalWorking capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
- Days Sales OutstandingDays Sales OutstandingIn accountancy, Days Sales Outstanding is a calculation used by a company to estimate their average collection period. A low number of days indicates that the company collects its outstanding receivables quickly. Typically, Days sales outstanding is calculated monthly...
- Days Payable Outstanding
- Cash Conversion CycleCash conversion cycleIn management accounting, the Cash Conversion Cycle measures how long a firm will be deprived of cash if it increases its investment in resources in order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth...