Formula
to calculate number of days inventory:
Number
of Days Inventory = 365 days / inventory turnover ratio.
Number
of days inventory ratio definition and explanation:
The number of days inventory is also known as average
inventory period and inventory holding period.
A high
number of days inventory indicates that their is a lack
of demand for the product being sold.
A low
days inventory ratio (inventory holding period) may indicate that the company is not keeping
enough stock on hand to meet demands.
The number of days inventory and inventory
turnover ratios are 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 number of days inventory ratio is listed in our efficiency
ratios.
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Spreadsheets to
calculate ratios (includes formulas, definitions,
explanations and charts):
See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios our spreadsheets
calculate, define and explain.
The number of days
inventory and inventory turnover ratio
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The days inventory ratio or
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