Difference between revisions of "Calculate Days in Inventory"
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Managing inventory is very important in a company that sells products to make a profit. Calculating inventory days is an indicator of how well the business is doing in terms of inventory. With this information, you can compare your business's inventory days with that of your competitors. A lower inventory days measurement means that you are achieving higher inventory turnover and a better return on assets. Calculating inventory days involves determining the cost of goods sold and average inventory in a given period. To calculate the days in inventory, you first must calculate the inventory turnover ratio, which comprises the cost of goods sold and the average inventory. Then, you'll need to divide the number of days in the period by this inventory turnover ratio to determine days in inventory. | Managing inventory is very important in a company that sells products to make a profit. Calculating inventory days is an indicator of how well the business is doing in terms of inventory. With this information, you can compare your business's inventory days with that of your competitors. A lower inventory days measurement means that you are achieving higher inventory turnover and a better return on assets. Calculating inventory days involves determining the cost of goods sold and average inventory in a given period. To calculate the days in inventory, you first must calculate the inventory turnover ratio, which comprises the cost of goods sold and the average inventory. Then, you'll need to divide the number of days in the period by this inventory turnover ratio to determine days in inventory. | ||
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== Steps == | == Steps == | ||
