The days-in-inventory ratio:

Question

Quizplus · Accepted Answer

The days-in-inventory ratio measures the number of days it takes for a company to acquire, sell and replace their inventory. It is calculated by dividing the average inventory by the cost of goods sold and multiplying by 365. Option B is incorrect because it calculates the average daily cost of inventory, not the days-in-inventory ratio. Option C is incorrect because it refers to the average collection period ratio rather than days-in-inventory. Option D is incorrect because the days-in-inventory ratio can vary significantly among industries depending on the nature of their goods and sales cycle.

The Days-In-Inventory Ratio