Definition for : Days of finished goods inventory ratio

Days of Finished goods inventory ratio reflects the time it takes the company to sell the products it manufactures, and calculated with respect to Cost of goods sold. This ratio is obtained by dividing the inventory of Finished goods by daily Cost of goods sold. If Cost of goods sold is not available, then daily Sales exclusive of VAT can be used to calculate this ratio.

(See Chapter 11 Working capital and capital expenditures of the Vernimmen)

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