Definition – What is Days in Inventory?
Days in Inventory is a measurement of the number of days an item spends in inventory.
Formula – How to calculate days in inventory
Days in Inventory = (Inventory / Cost of Sales) x 365
A company has inventory of $4,000 and cost of sales of $2,000.
Days in Inventory = ($4,000 / $2,000) x 365 = 2 x 365 = 730
Therefore, an item will spend 730 days in inventory.
Sources and more resources
- Wikipedia – Days in Inventory – An explanation of how the days in inventory metric.
- Accounting Tools – Days inventory outstanding – The days of inventory formula and an explanation of how it works.
- WikiHow – How to calculate days in inventory – A step by step explanation of how to calculate days in inventory.
- Investopedia – Days Sales of Inventory – DSI – A full explanation of days in inventory.