Days in Inventory Calculator

Inventory Days Outstanding Calculator

Input Fields

Average inventory

AI

$

Average inventory during the period (e.g. beginning + ending / 2)

Cost of goods sold (COGS)

COGS

$

Total cost of goods sold during the same period

Number of days

D

Typically 365 for annual, or 90 for quarterly analysis

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Your Results

Days in Inventory

Interpretation

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Days in Inventory Formula

$$\text{Days in Inventory} = \frac{365}{\text{Inventory Turnover Ratio}}$$ $$\text{Days in Inventory} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365$$

Explanation:
This metric shows how many days it takes to sell the entire inventory. A lower number indicates efficient inventory turnover; a higher number could suggest overstocking or slow-moving goods.

Days in Inventory is part of the cash conversion cycle and crucial for analyzing liquidity and operational efficiency. It helps businesses evaluate how quickly they convert inventory into sales, guiding decisions on purchasing, pricing, and supply chain management.

Example Variables:

• Average Inventory: $40,000
• Cost of Goods Sold: $240,000
• Days in Inventory = (40,000 / 240,000) × 365 = 60.83 days

Use Cases:

• Retail inventory planning
• Manufacturer production control
• Financial reporting and benchmarking