Talk:Days in inventory
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[edit]Is it correct to say Days in inventory = 365 / Inventory Turnover? For example, if the inventory turnover is 12, which means the goods turns 12 tiimes a year, is it correct to say the days in inventory is 30.
If so, it is suggested to link the page for inventory turnover and this page.
Turnover
[edit]Replying to above.
Good observation. The formula shown here for days inventory mathematically is correct. However, a more intuitive way of thinking about it is to take days/turnover. Using days rather than 365 makes the formula more general. If you are looking at a year's data of Cost of Goods Sold, you use 365 days, but if it's a quarter, use 90, 91 days.
I have not checked the link that explains inventory turnover. I would only link it if that one is correct, i.e., CoGS/Average Inventory for the period. Lastly, to be precise, 365/12 = 30.4.