DAYS TO SELL INVENTORY | The World of Accounting For Professional Accountants

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 COST of funds. Days to sell inventory is one of the components in determining a company's OPERATING CYCLE.