Financial Statement Analysis
 Ratio Analysis of Financial Statements (Formula, Types, Excel)
 Ratio Analysis Advantages
 Ratio Analysis
 Liquidity Ratios
 Cash Ratio
 Cash Ratio Formula
 Quick Ratio
 Quick Ratio Formula
 Current Ratio
 Current Ratio Formula
 Acid Test Ratio Formula
 Defensive Interval Ratio
 Working Capital Ratio
 Working Capital Formula
 Net Working Capital Formula
 Changes in Net Working Capital
 Cash Flow from Operations Ratio
 Cash Reserve Ratio
 Operating Cycle Formula
 Current Ratio vs Quick Ratio
 Bid Ask Spread
 Liquidity vs Solvency
 Liquidity
 Solvency
 Solvency Ratios
 Equity Ratio
 Capital Adequacy Ratio
 Liquidity Risk
 Altman Z Score
 Turnover Ratios
 Inventory Turnover Ratio
 Accounts Receivable Turnover
 Accounts Receivables Turnover Ratio
 Accounts Payable Turnover Ratio
 Days Inventory Outstanding
 Days in Inventory
 Days Sales Outstanding
 Average Collection Period
 Days Payable Outstanding
 Cash Conversion Cycle
 Cash Conversion Cycle (CCC) Formula
 Fixed Asset Turnover Ratio Formula
 Debtor Days Formula
 Working Capital Turnover Ratio
 Profitability Ratios
 Profitability Ratios Formula
 Common Size Income Statement
 Vertical Analysis of Income Statement
 Profit Margin
 Gross Profit Margin Formula
 Gross Profit Percentage
 Operating Profit Margin Formula
 EBIT Margin Formula
 Operating Income Formula
 Net Profit Margin Formula
 EBIDTA Margin
 Degree of Operating Leverage Formula (DOL)
 NOPAT Formula
 OIBDA
 Earnings Per Share
 Basic EPS
 Diluted EPS
 Basic EPS vs Diluted EPS
 Return on Equity (ROE)
 Return on Capital Employed (ROCE)
 Return on Invested Capital (ROIC)
 Return on Sales
 ROIC Formula (Return on Invested Capital)
 Return on Investment Formula (ROI)
 ROIC vs ROCE
 ROE vs ROA
 CFROI
 Cash on Cash Return
 Return on Total Assets (ROA)
 Return on Average Capital Employed
 Capital employed Employed
 Return on Average Assets (ROAA)
 Return on Average Equity (ROAE)
 Return on Assets Formula
 Return on Equity Formula
 DuPont Formula
 Net Interest Margin Formula
 Earnings Per Share Formula
 Diluted EPS Formula
 Contribution Margin Formula
 Unit Contribution Margin
 Revenue Per Employee Ratio
 Operating Leverage
 EBIT vs EBITDA
 EBITDAR
 Capital Gains Yield
 Tax Equivalent Yield
 LTM Revenue
 Operating Expense Ratio Formula
 Overhead Ratio Formula
 Variable Costing Formula
 Capitalization Rate
 Cap Rate Formula
 Comparative Income Statement
 Capacity Utilization Rate Formula
 Total Expense Ratio Formula
 Efficiency Ratios
 Dividend Ratios
 Debt Ratios
 Debt to Equity Ratio
 Debt Coverage Ratio
 Debt Ratio
 Debt to Asset Ratio Formula
 Coverage Ratio
 Coverage Ratio Formula
 Debt to Income Ratio Formula (DTI)
 Capital Gearing Ratio
 Capitalization Ratio
 Interest Coverage Ratio
 Times Interest Earned Ratio
 Debt Service Coverage Ratio (DSCR)
 DSCR Formula (Debt service coverage ratio)
 Financial Leverage Ratio
 Financial Leverage Formula
 Degree of Financial Leverage Formula
 Net Debt Formula
 Leverage Ratios
 Leverage Ratios Formula
 Operating Leverage vs Financial Leverage
 Current Yield
 Debt Yield Ratio
 Solvency Ratio Formula
Days in Inventory Formula
Days in inventory formula tells you how many days it takes for a firm to convert its inventory into sales.
Let’s have a look at the formula given below.
As you can see that we need to know the inventory turnover ratio before days in inventory calculation; here’s the formula of inventory turnover –
Now, the cost of goods sold can also be divided by the average inventory (that is the average of the beginning and the ending inventory) to find out the inventory turnover ratio.
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Days in Inventory Formula Example
Let’s take a practical example for days in inventory calculation by using a formula for Days in Inventory.
Niti wants to know the inventory days of Company Him. Here are a few details she gathered –
 The beginning and the ending inventories of the year are – $40,000 and $60,000 respectively.
 The cost of goods sold is $300,000.
 The year consists of 365 days.
Find out the Days in Inventory for Niti.
Here, first, we need to calculate the average inventory.
We know the beginning and the ending inventory of the year. We will use a simple average to find out the average inventory of the year.
 Average inventory of the year = (The beginning inventory + The ending inventory) / 2
 Or, Average inventory of the year = ($40,000 + $60,000) / 2 = $100,000 / 2 = $50,000.
Now, we will find out the inventory turnover ratio.
 Inventory turnover ratio = Cost of Goods Sold / Average Inventory = $300,000 / $50,000 = 6 times.
 Therefore, the inventory days would be = 365 / 6 = 61 days (approx.)
Explanation of Days in Inventory Formula
It is used to see how many days the firm takes to transform inventories into finished stocks.
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Since a major part of “days in inventory formula” includes the inventory turnover ratio, we need to understand the inventory turnover ratio to comprehend the meaning inventory days formula.
Inventory turnover ratio helps us understand the efficiency of the company to handle the inventories. It shows how good the company is to reduce overspending on inventory and also how well a company can convert the inventory into finish stocks.
For example, if a firm’s inventory turnover ratio is 10, then it means that the firm turns inventory into finished stock 10 times in a year.
And here comes the value of inventory days formula.
If we consider that there are 365 days in a year, we can see the days it takes for the firm to transform inventories into finished stocks. All we need to do is to divide the number of days in a year by the inventory turnover ratio.
Extending the above example, we get = (365 days / 10 times) = 36.5 days in inventory to transform the inventory into finished stocks.
Uses
We can derive the formula for Days in Inventory by including the number of days of the year with the inventory turnover ratio.
If you ever want to know about the efficiency of inventory management of a firm, you should look at both – inventory turnover ratio and inventory days.
By trying to find out the inventory days, you would be able to calculate both of the above ratios.
By using the formula for days in inventory, you will get to know how much time a firm takes to manage and transform its inventory.
Days in Inventory Calculator
You can use the following Days in Inventory Calculator
365 Days  
Inventory Turnover  
Days in Inventory Formula =  
Days in Inventory Formula = 


Days in Inventory in Excel (with excel template)
Let us now do the same example above in Excel.
This is very simple. First, you need to find out the average inventory of the year. And then you will find out the inventory turnover ratio.
You can easily find the days in inventory calculation in the template provided.
First, we need to calculate the average inventory.
Here We will use the simple average to find out the average inventory of the year.
Now, we will find out the inventory turnover ratio
Below is the formula to calculate Inventory Turnover Ratio
Now, we will find out the Days in Inventory for Niti by using the formula.
You can download this Days in Inventory Template here – Days in Inventory Excel Template
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This has been a guide to Days in Inventory Formula, practical examples and Days in Inventory calculator along with excel templates. You may also have a look at these articles below to learn more about Financial Analysis –
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