what is days sales of inventory dsi 
the days sales of inventory dsi is a financial ratio that indicates the average time in days that a company takes to turn its inventory including goods that are a work in progress into sales dsi is also known as the average age of inventory days inventory outstanding dio days in inventory dii days sales in inventory or days inventory and is interpreted in multiple ways indicating the liquidity of the inventory the figure represents how many days a company s current stock of inventory will last generally a lower dsi is preferred as it indicates a shorter duration to clear off the inventory though the average dsi varies from one industry to another investopedia zoe hansendays sales of inventory dsi formula and calculationd s i average inventory c o g s 365 days where d s i days sales of inventory c o g s cost of goods sold begin aligned dsi frac text average inventory cogs times 365 text days textbf where dsi text days sales of inventory cogs text cost of goods sold end aligned dsi cogsaverage inventory 365 dayswhere dsi days sales of inventorycogs cost of goods sold to manufacture a salable product a company needs raw material and other resources which form the inventory and come at a cost additionally there is a cost linked to the manufacturing of the salable product using the inventory such costs include labor costs and payments towards utilities like electricity which is represented by the cost of goods sold cogs and is defined as the cost of acquiring or manufacturing the products that a company sells during a period dsi is calculated based on the average value of the inventory and cost of goods sold during a given period or as of a particular date mathematically the number of days in the corresponding period is calculated using 365 for a year and 90 for a quarter in some cases 360 days is used instead the numerator figure represents the valuation of the inventory the denominator cost of sales number of days represents the average per day cost being spent by the company for manufacturing a salable product the net factor gives the average number of days taken by the company to clear the inventory it possesses two different versions of the dsi formula can be used depending upon the accounting practices in the first version the average inventory amount is taken as the figure reported at the end of the accounting period such as at the end of the fiscal year ending june 30 this version represents dsi value as of the mentioned date in another version the average value of start date inventory and end date inventory is taken and the resulting figure represents dsi value during that particular period therefore average inventory ending inventory text average inventory text ending inventory average inventory ending inventoryoraverage inventory beginning inventory ending inventory 2 text average inventory frac text beginning inventory text ending inventory 2 average inventory 2 beginning inventory ending inventory cogs value remains the same in both the versions 