Days in Inventory Calculator

Formula

To calculate the Days in Inventory (D):

\[ D = \frac{365}{\left(\frac{\text{COGS}}{\left(\frac{\text{BI} + \text{EI}}{2}\right)}\right)} \]

Where:

$D$ is the Days in Inventory
$COGS$ is the Cost of Goods Sold
$BI$ is the Beginning Inventory
$EI$ is the Ending Inventory

What is Days in Inventory?

Days in inventory is an average metric of the days an item sits in inventory before it's sold. It’s important to note that this is an average, and the actual days in inventory could vary greatly from item to item, especially at low volumes.

Example Calculation 1

Let's assume the following values:

Cost of Goods Sold (COGS) = $2000
Beginning Inventory (BI) = $500
Ending Inventory (EI) = $700

Step 1: Calculate the average inventory:

\[ \text{Average Inventory} = \frac{500 + 700}{2} = 600 \]

Step 2: Use the formula:

\[ D = \frac{365}{\left(\frac{2000}{600}\right)} = 109.5 \]

The Days in Inventory is 109.5 days.

Example Calculation 2

Let's assume the following values:

Cost of Goods Sold (COGS) = $1500
Beginning Inventory (BI) = $400
Ending Inventory (EI) = $600

Step 1: Calculate the average inventory:

\[ \text{Average Inventory} = \frac{400 + 600}{2} = 500 \]

Step 2: Use the formula:

\[ D = \frac{365}{\left(\frac{1500}{500}\right)} = 121.67 \]

The Days in Inventory is 121.67 days.