Days in inventory

Days in inventory

Days in inventory(DII) 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]

See also

Notes

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

External links


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