Definition for : Days' inventory ratio

Days' inventory ratio is the overall inventory turnover ratio, not meaningful in an absolute sense, but useful in analysing trends. It is calculated by dividing Inventories and work in process by average daily Sales (VAT exclusive). If information is available, the turnover ratios should be calculated in Days of raw material ratio, Days of goods held for resale ratio, Days of finished goods inventory ratio, and Days of work-in-process ratio.

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

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