Inventory represents the total of raw materials, work in process, and finished goods that a business holds for the purpose of resale.
In order to monitor the level of inventory it is useful to calculate how many days cost of sales the inventory represents. This value is referred to as inventory days, and shows the average number of days sales the business is holding, and reflects the efficiency of it’s inventory policies.
Inventory days is calculated using the inventory days formula, which divides inventory, taken from the balance sheet, by the average daily cost of sales, taken from the income statement.
Using the Inventory Days Calculator
The Excel inventory days calculator, available for download below, calculates the inventory days by entering details as follows:
- Enter the cost of sales. This is the value of cost of sales taken from the annual accounts or management accounts.
- Enter the period. This is number of days in the period, for annual accounts 365 days is used. The inventory days calculator calculates the average daily cost of sales for the period.
- Enter the inventory. This is the inventory (stock) taken from the balance sheet of the accounts. If opening and closing balances are available, then the average inventory balance can be used. The inventory days calculator calculates the average inventory days.
Inventory Days Calculator Download
The inventory days calculator is available for download in Excel format by following the link below.
The inventory days figure calculated by this template can be used as one of the inputs for our Financial Projections Template, which provides the financial section for a business plan.
Users use the inventory days spreadsheet to calculate inventory days at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of inventory turnover days forecasting software that you might use when drawing up a business plan. It is purely illustrative of an inventory turnover calculator. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the inventory days business plan template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.