Days Sales of Inventory
Definition
The average number of days inventory sits before being sold, calculated as average inventory divided by cost of goods sold, multiplied by 365. Also called days inventory outstanding.
In Practice
Days sales of inventory (DSI) restates inventory turnover in units everyone understands: days. It is a core component of the cash conversion cycle, so finance teams watch it closely; every day of inventory is a day of cash locked up before it can return as revenue.
For planners, DSI is useful because it is comparable across products with very different values and volumes. Tracking DSI by category quickly reveals where stock is aging, and pairing it with sell-through data separates deliberate builds, such as seasonal pre-stocking, from unintentional excess.
Example: a consumer goods company holds 5 million dollars of average inventory against 30 million dollars of annual COGS, giving a DSI of about 61 days. If the target is 45 days, the planner knows roughly 1.3 million dollars of inventory needs to come out through slower buying or promotions.
Related Calculators
Related Terms
A ratio measuring how many times inventory is sold and replaced over a period, typically a year. It is calculated as cost of goods sold divided by average inventory value.
Days of SupplyThe number of days current inventory will last at the expected rate of demand, calculated as on-hand quantity divided by average daily usage. It expresses stock levels in time rather than units or dollars.
Slow-Moving InventoryStock that sells or is consumed at a much lower rate than expected, sitting in the warehouse far longer than average. It still has demand, unlike dead stock, but turns too slowly to justify its inventory level.