Talk:Days in inventory

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Need some free consulting

Is it correct to say Days in inventory = 365 / Inventory Turnover? For example, if the inventory turnover is 12, which means the goods turns 12 tiimes a year, is it correct to say the days in inventory is 30.

If so, it is suggested to link the page for inventory turnover and this page.

Turnover

Replying to above.

Good observation. The formula shown here for days inventory mathematically is correct. However, a more intuitive way of thinking about it is to take days/turnover. Using days rather than 365 makes the formula more general. If you are looking at a year's data of Cost of Goods Sold, you use 365 days, but if it's a quarter, use 90, 91 days.

I have not checked the link that explains inventory turnover. I would only link it if that one is correct, i.e., CoGS/Average Inventory for the period. Lastly, to be precise, 365/12 = 30.4.

BugsyJunior (talk) 02:37, 15 July 2012 (UTC)[reply]