1. What is Inventory Days On Hand?

Days of Inventory On Hand (DOH) is a financial ratio that measures the average number of days a company holds its inventory before selling it. It indicates how efficiently a company manages its inventory levels and turnover.

2. How Does the Calculator Work?

The calculator uses the DOH formula:

Where:

• \( Inventory \) — Value of inventory in dollars
• \( COGS \) — Cost of Goods Sold in dollars
• \( 365 \) — Number of days in a year

Explanation: The formula calculates how many days it would take to sell the current inventory based on the cost of goods sold rate.

3. Importance of DOH Calculation

Details: DOH is crucial for inventory management, cash flow optimization, and assessing operational efficiency. A lower DOH indicates faster inventory turnover and better liquidity.

4. Using the Calculator

Tips: Enter inventory value and COGS in dollars. Both values must be positive numbers. Use consistent time periods for accurate comparisons.

5. Frequently Asked Questions (FAQ)

Q1: What is a good DOH value?
A: Ideal DOH varies by industry. Generally, lower values are better, but it depends on the business model and industry standards.

Q2: How often should DOH be calculated?
A: DOH should be calculated regularly (monthly or quarterly) to monitor inventory management efficiency and identify trends.

Q3: What causes high DOH?
A: High DOH can indicate overstocking, slow-moving inventory, poor sales forecasting, or declining demand.

Q4: How can DOH be improved?
A: Improve DOH by optimizing inventory levels, implementing better demand forecasting, and improving sales strategies.

Q5: Is DOH the same as inventory turnover?
A: DOH is the inverse of inventory turnover. DOH = 365 / Inventory Turnover Ratio.