Age of Inventory Calculator

Calculate Age of Inventory





Formula

The formula to calculate the age of inventory is:

\[ \text{Age of Inventory} = \left(\frac{\text{Average Inventory}}{\text{COGS}}\right) \times \text{Days in Period} \]

Where:

Definition

Example

Let's say the average inventory is $100,000, the cost of goods sold (COGS) is $500,000, and the days in the period is 365. Using the formula:

\[ \text{Age of Inventory} = \left(\frac{100000}{500000}\right) \times 365 \]

We get:

\[ \text{Age of Inventory} \approx 73\, \text{days} \]

So, the age of inventory is approximately 73 days.

Extended information about "Age-of-Inventory-Calculator"

Age of Inventory Formula

Definition: The age of inventory measures the average time inventory is held before being sold.

Formula: \( \text{Age of Inventory} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365 \)

Example: \( \text{Age of Inventory} = \frac{50000}{200000} \times 365 \)

Average Age of Inventory

Definition: The average age of inventory is the average time inventory is held before being sold.

Formula: \( \text{Average Age of Inventory} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365 \)

Example: \( \text{Average Age of Inventory} = \frac{60000}{240000} \times 365 \)

Age of Inventory Ratio

Definition: The age of inventory ratio indicates how long inventory is held before being sold.

Formula: \( \text{Age of Inventory Ratio} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365 \)

Example: \( \text{Age of Inventory Ratio} = \frac{70000}{280000} \times 365 \)

How to Calculate Inventory Aging

Definition: Inventory aging calculates the age of inventory to manage stock levels and reduce holding costs.

Formula: \( \text{Inventory Aging} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365 \)

Example: \( \text{Inventory Aging} = \frac{80000}{320000} \times 365 \)

How to Calculate Beginning Inventory

Definition: Beginning inventory is the value of inventory at the start of an accounting period.

Formula: \( \text{Beginning Inventory} = \text{Ending Inventory} + \text{Cost of Goods Sold} - \text{Purchases} \)

Example: \( \text{Beginning Inventory} = 90000 + 400000 - 350000 \)

Months of Inventory Calculation

Definition: The months of inventory calculation measures how many months it will take to sell the current inventory.

Formula: \( \text{Months of Inventory} = \frac{\text{Ending Inventory}}{\text{Monthly Sales}} \)

Example: \( \text{Months of Inventory} = \frac{100000}{25000} \)

Average Inventory for the Year

Definition: The average inventory for the year is the average value of inventory over a year.

Formula: \( \text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2} \)

Example: \( \text{Average Inventory} = \frac{120000 + 180000}{2} \)