1. What Is Inventory Turns To Days?

Inventory Turns To Days is a financial metric that converts inventory turnover ratio into the average number of days it takes to sell through inventory. This helps businesses understand how efficiently they are managing their inventory levels and cash flow.

2. How Does The Calculator Work?

The calculator uses the simple formula:

Where:

• \( Days \) — Average number of days to sell inventory
• \( Turnover \) — Inventory turnover ratio (turns per year)
• \( 365 \) — Number of days in a year

Explanation: This calculation converts the annual turnover rate into a daily perspective, showing how long inventory typically sits before being sold.

3. Importance Of Inventory Days Calculation

Details: Knowing inventory days helps businesses optimize stock levels, reduce carrying costs, improve cash flow, and identify potential inventory management issues. Lower days generally indicate better inventory efficiency.

4. Using The Calculator

Tips: Enter the inventory turnover ratio (annual turns). The value must be greater than zero. The result shows the average number of days inventory remains in stock before being sold.

5. Frequently Asked Questions (FAQ)

Q1: What is a good inventory days number?
A: It varies by industry, but generally lower numbers are better. Typical ranges are 30-90 days for most retail businesses, while some industries may have longer cycles.

Q2: How is inventory turnover calculated?
A: Inventory turnover = Cost of Goods Sold ÷ Average Inventory. This gives the number of times inventory is sold and replaced during a period.

Q3: Why use 365 days instead of 360?
A: 365 provides a more accurate annual calculation, though some businesses use 360 for simplicity in monthly calculations (30 days per month).

Q4: What if my turnover is seasonal?
A: For seasonal businesses, calculate turnover for the specific season or use weighted averages to get more accurate daily calculations.

Q5: How can I reduce inventory days?
A: Strategies include improving demand forecasting, implementing just-in-time inventory, optimizing reorder points, and reducing slow-moving stock.