Formula
to calculate age of inventory ratio:
Age
of Inventory = 365 days / inventory turnover ratio
Age
of inventory ratio definition and explanation:
The Age
of Inventory shows the number of days that inventory is
held prior to being sold.
An
increasing age of inventory ratio indicates a risk in the company's
inability to sell its products. Individual inventory
items should be examined for obsolete or overstocked
items.
A
decreasing age of inventory may represent
under-investment in inventory.
The Age of Inventory Ratio is also referred to as the
Number of Days Inventory, Days Inventory or
Inventory
Holding Period.
The Age of Inventory ratio is included in the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The age of inventory ratio (also known as Number of
Days Inventory, Days Inventory or Inventory Holding
Period) is listed in our efficiency
ratios.
The age of inventory ratio and other ratios are key
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Spreadsheets to
calculate ratios (includes formulas, definitions,
explanations and charts):
See list
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analysis spreadsheets which are not highlighted in the
left column, to see which other ratios our spreadsheets
define, calculate and explain.
The age of inventory
(inventory holding period) is included in our
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The age of inventory ratio,
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