Days' sales in inventory ratio

(redirected from Days to Sell Inventory)

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 ?
The activity ratios in this study included reinvestment rate, earnings retention rate, days to sell inventory, total equity turnover, and Berry ratio.
The final set of ratios include reinvestment rate, earnings retention rate, days to sell inventory, total equity turnover, berry, total debt/total capital, fixed assets/total equity, total receivables/ accounts payable, interest coverage before tax, days to pay accounts payable, cash turnover, and funds flow adequacy ratio.
Operating Efficiency, the third factor, consists of fixed assets to total equity, total equity turnover, and days to sell inventory.