Ratio: Inventory divided by the Average Daily COS
where Average Daily COS = (Annual COS/365)
Example: The Round Number CompanyCOS = 80; Inventory = 50 Average Daily COS = 80/365 = 0.22 Days Inventory Outstanding = 50/0.22 = 227 Days |
The ratio shows how quickly inventories are converted into Cash.
Days Inventory Outstanding is part of the Cash Conversion Cycle.
Also called Days Sale Inventory or Days On Hand (DOH).
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term list.