Financial Ratio
Inventory Number of days
While the Inventory turnover ratio gives a sense of how many times the company ‘replenishes’
their inventory, the ‘Inventory number of Days’ gives a sense of how much time the company
takes to convert its inventory into cash. Lesser the number of days, the better it is. A short inven-
tory number of day’s number implies, the company’s products are fast moving. The formula to
calculate the inventory number of days is:
Inventory Number of Days = 365 / Inventory Turnover
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