Financial Quotient

What is days sales in inventory?

A company's days sales in inventory (also called DSI or days in inventory) refers to the average number of days that a firm takes to convert its inventory into sales.

It can be estimated by dividing the average inventory of the company, say, over a year, by its average daily cost of goods sold. It can also be computed over a monthly or quarterly period.

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A version of this article appeared in the print edition of The Sunday Times on April 29, 2018, with the headline 'What is days sales in inventory?'. Print Edition | Subscribe