Days' sales in inventory ratio


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Days' sales in inventory ratio

The average number of days' worth of sales that is held in inventory.

Days' Sales in Inventory Ratio

A measure of how quickly a company turns its inventory into sales. It is calculated by dividing the value of inventory by the value of sales and multiplying by 365. A shorter DSI is considered preferable, as it means there is a shorter period between the acquisition of inventory and its sale, but different industries have different standards with regard to the length of the DSI. It is used with days sales outstanding and days payable outstanding to help determine the financial health of a company.