Inventory Turn Days

Inventory Turn Days: This ratio is a measure of how long a company holds its inventory. Inventory Turn Days as a ratio is important because each day inventory is held prevents conversion of that inventory to cash – thus, said another way, each day inventory is held has a cost and the faster inventory is turned, the more efficient the company and the more cash it can generate. This metric can only be measured if a company uses the Accrual Basis Accounting.

Formula:  Inventory X 30 Days / COGS (monthly)