Which financial indicator measures the number of one day's worth of inventory that a company has on hand at any given time?
A) days of cash
B) days of inventory
C) average collection period
D) fixed asset turnover
E) inventory turnover

Question

Quizplus · Accepted Answer

Days of inventory measures the average number of days it takes for a company to sell its inventory. It is calculated by dividing the average inventory by the cost of goods sold and multiplying by 365 days. This indicator gives insight into how efficiently a company is managing its inventory levels and can help identify potential issues such as overstocking or slowing sales.

Which Financial Indicator Measures the Number of One Day's Worth