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QuestionsCategory: Financials QuadrantInventory Days clarification
Ying Qin Lee asked 3 years ago

Inventory Days was said to be the measure of how many days it take to turn inventory to sales. How does (inventory) / (cost of good sold) x 365 gives that? How do stock(item with value) / cost ($) give time or days?

For background, 
Inventory (also known as stock) refer to raw materials, work in progress goods and finished goods that the business holds for production or sale to customers.

Cost of Goods Sold (COGS) is the cost of creating a product sold by the company such as raw materials, component parts, shipping and distribution costs, etc.

Ying Qin Lee replied 3 years ago

Please ignore this part “How do stock(item with value) / cost ($) give time or days?” as the “x365” serves to introduce the days.

How do dividing the (value of the inventory, $) by the (cost of creating or distributing the product, $) x 365 days give the days for turn inventory into sales?

Ying Qin Lee replied 3 years ago

Please ignore this part “How do stock(item with value) / cost ($) give time or days?” as the “x365” serves to introduce the days.

How do dividing the (value of the inventory, $) by the (cost of creating or distributing the product, $) x 365 days give the days for turn inventory into sales?

Ying Qin Lee replied 3 years ago

Please ignore the question. I had understood why.

1 Answers
Victor Chng answered 3 years ago

Hi Ying Qin,
 
No prob, if you still have questions, please feel free to ask :)