Days Inventory Outstanding

Ratio: Inventory divided by the Average Daily COS

where Average Daily COS = (Annual COS/365)

Example: The Round Number Company

COS = 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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Days Inventory Outstanding

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