This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
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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Calculator for Days Inventory Outstanding
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The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.