Days in inventory

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Days is an efficiency ratio that measures the average number of days the company holds its inventory before selling it.

The formula for DII is:

DII = \dfrac{average~inventory}{COGS/Days}

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.[1]

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Notes[edit]

  1. ^ Berman, K., Knight, J., Case, J.: Financial Intelligence for Entrepreneurs, page 149. Harvard Business Press, 2008.

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