{"id":306896,"date":"2026-07-17T11:46:57","date_gmt":"2026-07-16T23:46:57","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?post_type=sbh&p=306896"},"modified":"2026-07-17T11:55:51","modified_gmt":"2026-07-16T23:55:51","slug":"inventory-days","status":"publish","type":"sbh","link":"https:\/\/www.reckon.com\/au\/small-business-resources\/inventory\/inventory-days\/","title":{"rendered":"Inventory Days: How To Calculate, Interpret And Improve DSI"},"content":{"rendered":"

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For small businesses that rely on inventory, it’s essential to know how much stock comes in and goes out. It’s especially important to know how long you hold onto stock before selling it. “Inventory days” is a useful metric that helps businesses identify issues and improve operational efficiency and cash flow.<\/p>\n

What are inventory days?<\/h2>\n

Inventory days are the average time it takes to sell inventory<\/a>. How long it takes for inventory to sell helps businesses plan when to purchase more, among other things. Basically, inventory days provide context to your operations and inform critical business decisions.<\/p>\n

Hot Tip!<\/strong> When discussing or using inventory day metrics, several interchangeable formulas and metrics cover the same concept: days sales inventory (DSI), days inventory outstanding (DIO), days in inventory (DII), and inventory days of supply (IDS). They all calculate the same thing.<\/p>\n

How To Calculate Inventory Days (Formula And Steps)<\/h2>\n

Calculating how long it takes to convert inventory into sales requires a few key steps. First, you need to know your inventory turnover<\/a>, which is how many times you sell your entire inventory over a specific accounting period. This is also known as your inventory turnover ratio.<\/p>\n

[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2026\/07\/Inventory-days-formula-.png” alt=”Inventory days formula ” title_text=”Inventory Days Formula” align=”center” _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

To get this, divide your cost of goods sold (COGS<\/a>) \u2014 the total cost of your raw materials, direct labour, manufacturing overheads, and supply\/freight costs \u2014 by your average inventory cost. Your average inventory is determined by adding your beginning and ending inventory and dividing by 2.<\/p>\n

Here is an example:<\/p>\n