Inventory Days

The average number of days a business holds inventory before it is sold, calculated by dividing average inventory value by the daily cost of goods sold, indicating how efficiently stock is being turned over.

Excess inventory days ties up capital in unsold stock, incurs storage costs, and risks obsolescence. Reducing inventory days through better forecasting and supplier management frees up cash that can be deployed more productively.

A founder holds an average of £30,000 in product inventory and her daily cost of goods sold is £400. Her inventory days are 75. She identifies slow-moving lines, runs a clearance promotion, and improves her reorder system, reducing inventory days to 45 and releasing £12,000 in working capital.