Days in inventory
'Days in inventory' is an efficiency ratio that measures the average number of days the company holds its inventory before selling it.
The formula for DII is:
where the average inventory is the average of inventory levels at the beginning and end of an accounting period, and COGS/day is calculated by dividing the total cost of goods sold per year by 365 days.
- Berman, K., Knight, J., Case, J.: Financial Intelligence for Entrepreneurs, page 149. Harvard Business Press, 2008.