Question

Explain "Days of Inventory on Hand" and discuss the implications if the "Days of inventory on hand" show an increase annually (NO PLAGIARISM- 1 to 2 paragraphs answer)

Days of Inventory on Hand

54.95

53.72

55.29

60.48

63.48

59.03

63.50

67.61

66.28

64.67

66.90

Answer 1

Answer :-

Days of Inventory on Hand i a financial ratio That indicates the avarage time in days that a company takes to turn it's inventory into sales, it is also an estimate of the number of days for which the avarage balance of inventory wil be sufficiant, it also measures the efficiancy of business in managing it's inventory,

Days of Inventory on Hand is also known as Avarage Age of Inventory,days inventory outstanding, Days in Inventory, Days sales in Inventory, and is itrepreted in multiple ways,Indicating the liquidity of the inventory,the figures represents how many days a company's current stock of inventory will last,Generally a lower Days of inventry is preferred as it indicates a shorter duration to clear off the inventory, though the avarage Days of Inventory on Hand varies from one industry to another

Days of Inventory on Hand = (Avarage inventory / Cost of goods sold ) × 365 Days