Management uses **Average Inventory Period Formula** to find, which products are selling fast and which are stagnant. If the result of the formula is in the low ratio t means that the products of the company sell in a very short time. If the result given by this formula is high then the company take much time to sell its products.

## Average Inventory Period Formula

Average Inventory Period Formula is calculated by dividing the number of days in period by inventory turnover of the company.

**Average Inventory Period= Number of Days in Period/Inventory Turnover**

Period mention in the above formula may be of 30 days, 6 months. or 1 year. Period depend on the policies of the company.