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Homework answers / question archive / how do you calculate days-in inventory ratio?  

how do you calculate days-in inventory ratio?  

Accounting

how do you calculate days-in inventory ratio?

 

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The days sales inventory is calculated by dividing the ending inventory by the cost of goods sold for the period and multiplying it by number of days in a year.

Formula;

Day's sales inventory ratio= (Ending inventory/ Cost of goods sold)* 365

Days in inventory ratio usually focuses on ending inventory whereas inventory turnover ratio focuses on average inventory.