Operations
Days of inventory from turnover
Converts the ratio into time. It is the same fact as turnover, expressed as how many days of stock are on hand.
The Formula
D = days / T
Converts the ratio into time. It is the same fact as turnover, expressed as how many days of stock are on hand.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| days | Length of the period in days | days | 365 for a calendar year, or 360 under the convention some firms prefer. |
| T | Inventory turnover | ratio | The number of turns computed from cost of goods sold and average inventory. |
| D | Days of inventory | days | 365 / 8 = 45.625 on the worked case. The average number of days stock sits before it sells. |
What Each Symbol Means
daysdays
Length of the period in days
365 for a calendar year, or 360 under the convention some firms prefer.
Tratio
Inventory turnover
The number of turns computed from cost of goods sold and average inventory.
Ddays
Days of inventory
365 / 8 = 45.625 on the worked case. The average number of days stock sits before it sells.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate inventory turnover page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Inventory Turnover, filed under Business. Every number the guide produces comes from substituting into this one line.