Inventory Days
A metric measuring how long inventory remains before selling, calculated by dividing average inventory by daily cost of goods sold to evaluate inventory management efficiency.
Inventory Days
A financial metric that measures how many days, on average, a company holds its inventory before selling it, calculated by dividing average inventory by daily cost of goods sold.
For instance, a retailer with average inventory of $500,000 and annual cost of goods sold of $3,650,000 (or $10,000 per day) would have inventory days of 50, meaning inventory is held for approximately 50 days before being sold.
Also called days inventory outstanding (DIO) or days sales of inventory (DSI), this metric helps evaluate inventory management efficiency. Lower values generally indicate better inventory management, though optimal levels vary by industry. Tracking this metric over time can reveal trends in operational efficiency, while comparing to industry benchmarks helps assess relative performance. Inventory days is often analyzed alongside accounts receivable days and accounts payable days to determine the cash conversion cycle.