How to Calculate Inventory Turnover Days

Calculator image by Alhazm Salemi from <a href='http://www.fotolia.com'>Fotolia.com</a>

Inventory turnover in days takes a firm's inventory turnover ratio and divides it by 365. The ratio shows how many days it takes a company to sell off the inventory it has on hand. The lower the inventory ratio in days, for example three days, the faster a company sells off its inventory during the year.

The higher the inventory ratio in days, for example 80 days, the slower a company sells of its inventory. This ratio is subjective, so you need to compare results with industry and similar firm results.

Find cost of goods sold on a company's income statement. Find inventory on the same company's balance sheet.

  • Inventory turnover in days takes a firm's inventory turnover ratio and divides it by 365.
  • The lower the inventory ratio in days, for example three days, the faster a company sells off its inventory during the year.

Divide cost of goods sold by inventory to calculate inventory turnover.

Divide 365 by inventory turnover to calculate inventory turnover in days.

×