Dictionary of Accounting Terms: days to sell inventory
days to sell inventory
ratio measuring the number of days inventory is held. As a general rule, the longer inventory is held, the greater is its risk of not being sold at full value. This ratio is crucial in the case of inventory that is perishable or prone to obsolescence, such as high technology and fashion items. Inventory also involves an opportunity costof funds. Days to sell inventory is one of the components in determining a company's operating cycle. Assume an inventory turnoverof 10 times. This means that the number of days inventory is held equals:
| 360 10 | = 36 days |
