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| ''Financial ratio analysis - management efficiency ratios.''
| | (IMA). |
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| Inventory days is a working capital management ratio calculated by dividing inventory outstanding at the end of a time period by the average daily cost of goods sold for the period.
| | Organisation that represents the UK investment management industry. |
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| For example: a company holds on average £30,000 of stock over a year. It sells £300,000 of goods per annum.
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| The inventory days are:
| | ==See also== |
| | | * [[Investment]] |
| (30,000 / 300,000) x 365
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| = 36.5 days
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| A lower number of days is usually considered desirable, because it is a quick measure of the amount of stock held, although the business must also gauge the amount of stock required to meet customers’ delivery expectations.
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| Also known as Days inventory outstanding (DIO).
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| == See also == | |
| * [[Cost of goods sold]] | |
| * [[Creditors]]
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| * [[DPO]]
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| * [[DSO]]
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| * [[Inventory]]
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| * [[Inventory turnover]]
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| * [[Management efficiency ratio]]
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| * [[Operating cycle]]
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| * [[Payables management]]
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| * [[Working capital]]
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| [[Category:Accounting,_tax_and_regulation]]
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| [[Category:The_business_context]]
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Revision as of 15:28, 28 February 2014
(IMA).
Organisation that represents the UK investment management industry.
See also