What is Days in Inventory?
Days in Inventory is a liquidity measure that shows how many days it takes a company to turn around its inventory.
Synonyms: Number of Days of Inventory, Days of Inventory, Days Inventory Outstanding.
How to Calculate Days in Inventory
Days in Inventory is calculated by dividing 365 Days by Inventory Turnover.
How to Interpret Days in Inventory
Few days in inventory means a company quickly turns around its inventory. This means cash is tied up in inventory for less time, which is generally a sign of efficient cash management.
On the other hand, many days in inventory means it takes a company longer to sell its inventory, which ties up cash that could be used for other purposes.
