Days Sales Of Inventory - DSI

Days Sales Of Inventory - DSI

A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its raw materials into sales. The lower (shorter) the DSI the better, but it is important to note that the typical DSI will vary from one industry to another.

Here is how the DSI is calculated:

Notes:

This measure is one part of the cash conversion cycle, which represents the process of turning raw materials into cash. The days inventory of sales is the first stage in that process. The other two stages are 'days sales outstanding' and 'days payable outstanding'. The first measures how long it takes a company to receive payment on accounts receivable, and the second measures how long it takes a company to pay off its accounts payable.

See also: Accounts Payable - AP, Accounts Receivable - AR, Cash Conversion Cycle, Cost of Goods Sold - COGS, Days Payable Outstanding - DPO, Days Sales Outstanding - DSO, Inventory