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.
References in periodicals archive ?
Debt Ratio and Days Sales of Inventory of Lelon, Q2 2006-Q4 2009
The Company expects to maintain its industry leading cash conversion cycle and to maintain a leading position in days sales of inventory.
The Company experienced consolidated sequential revenue growth of 19% and sequential PC unit growth of 21% over the fourth quarter of fiscal 1998, and continued to make progress in other areas of business operations, including further reducing days sales of inventory to seven days and maintaining an industry-leading position in cash conversion cycle of negative 18 days.