**Formula
to calculate average inventory period:**
**Average
Inventory Period = (inventory x 365 days) / cost of
sales.**
###
### Average
inventory period definition and explanation:
**The
average inventory period is also referred to as Days
Inventory and Inventory Holding Period.**
This
ratio calculates the average time that inventory is
held.
Individual
inventories should be looked at to find areas where the
inventory, and inventory holding period, can be
reduced.
The * *** average inventory period** should be compared to
competitors.
The * *** average inventory period** is included in the the **financial
statement ratio analysis spreadsheets highlighted in the
left column,** which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The ** *** average inventory period*, * Days Inventory* or
*
Inventory Holding Period* is listed in our
**efficiency
ratios**.
The **average inventory
period** and other ratios are **key
to understanding financial statements**. Our
ratio calculation spreadsheets **reduce time
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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
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calculate, define and explain.
The *average inventory period*
may be included in our
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statement ratio analysis spreadsheet.
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