1. What is Days of Inventory Held?

Days of Inventory Held (DOH) is a financial metric that measures how many days it would take for a company to sell its entire inventory based on current sales rates. It indicates inventory management efficiency and liquidity.

2. How Does the Calculator Work?

The calculator uses the DOH formula:

Where:

• \( Inventory \) — Total value of inventory in dollars ($)
• \( Daily\ Sales \) — Average daily sales in dollars per day ($/day)

Explanation: This formula calculates the number of days it would take to completely sell out the current inventory at the current daily sales rate.

3. Importance of DOH Calculation

Details: DOH is crucial for inventory management, cash flow planning, and identifying potential overstocking or understocking issues. Lower DOH generally indicates better inventory turnover and liquidity.

4. Using the Calculator

Tips: Enter inventory value in dollars and daily sales in dollars per day. Both values must be positive numbers (inventory ≥ 0, daily sales > 0).

5. Frequently Asked Questions (FAQ)

Q1: What is a good DOH value?
A: Ideal DOH varies by industry, but generally 30-60 days is considered healthy for most retail businesses. Lower values indicate faster inventory turnover.

Q2: How is daily sales calculated?
A: Daily sales can be calculated by dividing total sales for a period by the number of days in that period (e.g., monthly sales ÷ 30 days).

Q3: What does high DOH indicate?
A: High DOH may indicate overstocking, slow-moving inventory, or declining sales, which can tie up capital and increase storage costs.

Q4: What does low DOH indicate?
A: Low DOH suggests efficient inventory management and strong sales, but extremely low values may risk stockouts and lost sales opportunities.

Q5: How often should DOH be calculated?
A: DOH should be monitored regularly (monthly or quarterly) to track inventory performance and make timely business decisions.