Number of days of inventory on hand

Number of days of inventory on hand,

Definition of Number of days of inventory on hand:

  1. A ratio measuring the average number of days an item is held in the inventory. Since inventory cost represents the opportunity cost of funds, this ratio indicates how well inventory is being managed, and is one of the elements in determining the operating cycle of a company. Formula: Number of units in inventory x 365 ÷ Annual usage in number of units.

Meaning of Number of days of inventory on hand & Number of days of inventory on hand Definition