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How to Calculate Inventory Days.
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How to Calculate Inventory Days.

Rosemary Njeri

Inventory days refers to the number of days it takes for inventory to turn into sales.

Calculating inventory days measures the average length of time that a company’s cash is locked up in the inventory.

A small average of days sales, or low days sales in inventory, indicates that a business is efficient.

Formula to calculate inventory days.

Calculate Inventory Days.

Average stock is sum of the starting stock and ending stock divided by 2.

Example:

Suppose the your COGS was $ 1,000,000, calculate the inventory days if the average inventory is $ 500,000.

Calculate Inventory Days.

Therefore, your inventory days are 182.5.

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