1. What Is Days Inventory Held?

Days Inventory Held (DII) is a financial metric that measures the average number of days a company holds its inventory before selling it. It indicates how efficiently a company manages its inventory levels and turnover.

2. How Does The Calculator Work?

The calculator uses the Days Inventory Held formula:

Where:

• \( DII \) — Days Inventory Held (days)
• \( Turnover\ Ratio \) — Inventory turnover ratio (turns per year)

Explanation: This formula converts the annual inventory turnover ratio into the average number of days inventory is held before being sold.

3. Importance Of Days Inventory Held Calculation

Details: DII is crucial for inventory management, cash flow analysis, and operational efficiency. Lower DII values generally indicate better inventory management and faster inventory turnover.

4. Using The Calculator

Tips: Enter the inventory turnover ratio in turns per year. The value must be greater than zero. The calculator will compute the average days inventory is held.

5. Frequently Asked Questions (FAQ)

Q1: What Is A Good Days Inventory Held Value?
A: Ideal DII varies by industry, but generally lower values are better. Compare with industry averages for meaningful analysis.

Q2: How Is Inventory Turnover Ratio Calculated?
A: Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory.

Q3: Why Use 365 Days In The Formula?
A: 365 represents the number of days in a year, converting annual turnover ratio to daily inventory holding period.

Q4: What Does High DII Indicate?
A: High DII may indicate slow-moving inventory, overstocking, or potential obsolescence issues.

Q5: Can DII Be Calculated For Different Periods?
A: Yes, for quarterly analysis use 90 days instead of 365, or for monthly use 30 days.