## About Days In Inventory Calculator (Formula)

The “Days in Inventory” is a financial metric that measures how long, on average, it takes for a company to sell its inventory. It’s also known as “Inventory Turnover Days” or “Inventory Holding Period.” This metric is essential for businesses to manage their inventory effectively and optimize their working capital.

The formula for calculating Days in Inventory is:

**Days in Inventory=365/Inventory Turnover Ratio**

Where:

- 365 represents the number of days in a year.
- Inventory Turnover Ratio is calculated as follows:

**Inventory Turnover Ratio=Cost of Goods Sold (COGS)/Average Inventory**

Where:

- COGS (Cost of Goods Sold) represents the total cost of goods sold by a company over a specific period.
- Average Inventory is typically calculated as the average of BeginningInventory (BI) and EndingInventory (EI) over the same period.

So, the complete formula for Days in Inventory can be expressed as:

**D=365/(COGS/(BI+EI/2))**

- COGS represents the cost of goods sold during a specific period.
- BI (Beginning Inventory) represents the value of inventory at the beginning of the period.
- EI (Ending Inventory) represents the value of inventory at the end of the period.

The Days in Inventory metric is important for assessing how efficiently a company manages its inventory. A lower number of days indicates that inventory is being sold quickly, which can be a positive sign of efficient operations. Conversely, a higher number of days may indicate slow-moving or excess inventory, which can tie up working capital and potentially lead to increased carrying costs.