Enter the cost of sold items, beginning inventory balance, and ending inventory balance into the calculator. The calculator will evaluate the days in inventory.
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Days In Inventory Formula
The following equation can be used to calculate the average days in inventory of an item.
D = 365/ (COGS / ( BI + EI /2 ) )
- Where D is the days in inventory
- COGS is the total cost of sold items
- BI is the beginning inventory balance ($)
- EI is the ending inventory balance ($)
Days in Inventory Definition
Days in inventory is an average metric of the days an item sits in inventory before it’s sold. It’s important to note that this is an average, and the actual days in inventory could vary greatly from item to item especially at low volumes.
Days in Inventory Example
How to calculate days in inventory?
- First, determine the total cost.
Calculate the total cost of goods sold.
- Next, determine the beginning inventory.
Calculate the value of the inventory at the beginning of the period.
- Next, determine the ending inventory.
Calculate the value of the inventory at the end of the period.
- Finally, calculate the days in inventory.
Use the formula above to calculate the days in inventory.
The number of days in inventory is the average number of days a product will sit in inventory before it is sold.