Days Sales in Inventory Formula is mostly used by the investors and creditors to measure the value, liquidity, and cash flows of the inventory.
Days Sales in Inventory Formula can be calculated by dividing the ending inventory by cost of goods sold and multiply by 365.
Days Sales in Inventory= (Ending Inventory/Cost of Goods sold) x 365
On the balance sheet ending inventory is available and COGS is available on the income statement. 365 days means the period is 1 year.
If the result of the above formula has high value it means that the inventory takes much time to sell. SO low value is more favourable than the high value. You can learn the definition of Days sales in Inventory.
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