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 = 55 Average Daily COS = 80/365 = 0.22 Days Sales Inventory = 50/0.22 = 227 Days |
The ratio shows how quickly inventories are converted into Cash.
Days Sales Inventory or Days Inventory Outstanding is part of the Cash Conversion Cycle.
Also called Days Inventory Outstanding or Days On Hand (DOH).
|
Calculator for Days Sales Inventory
|
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.