days inventory Definition

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days inventory

Definition

A measure of performance, calculated by average inventory divided by average daily cost of sales. This returns a figure equivalent to the number of days an item is held as inventory before it is sold. The lower the days inventory, the more efficient the company is, all other things being equal. Days inventory is the first step measured in the cash conversion cycle, followed by Days Sales Outstanding and days payable outstanding.

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'days inventory' appears in the definitions of these other terms on BusinessDictionary.com

days cover, days of inventory, days sales to inventory

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