Formula
to calculate average inventory period:
Average
Inventory Period = (inventory x 365 days) / cost of
sales.
Average
inventory period definition and explanation:
The
average inventory period is also referred to as Days
Inventory and Inventory Holding Period.
This
ratio calculates the average time that inventory is
held.
Individual
inventories should be looked at to find areas where the
inventory, and inventory holding period, can be
reduced.
The average inventory period should be compared to
competitors.
The average inventory period is included in the the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The average inventory period, Days Inventory or
Inventory Holding Period is listed in our
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calculate ratios (includes formulas, definitions,
explanations and charts):
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left column, to see which other ratios our spreadsheets
calculate, define and explain.
The average inventory period
may be included in our
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