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Inventory days / Days sales of inventory (DSI)

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  • April 8, 2020 at 1:34 pm
    Inventory days / Days sales of inventory (DSI) 2
    Tharupahan
    Participant

    Everyone says,
    DSI = average inventory ÷ cost of goods sold × 365

    Now my problem is about avg inventory and cost of goods sold.

    Does average inventory means average inventory that we had each day ? And does cost of goods sold means average cost of goods sold per each day ?

    Please explain this! Thanks very much

    April 8, 2020 at 4:32 pm
    Inventory days / Days sales of inventory (DSI) 3
    John Moffat
    Keymaster

    Average inventory is nothing to do with how many were sold. It is the average level of the goods held in inventory over the year.

    The cost of goods sold is the total cost of what was sold during the year.

    It will help you to watch my free lectures. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

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