Inventory Days is an Efficiency metric that indicates how many days it takes for a company to convert its inventory into sales.
Minimum Inventory Days, the better it is as it indicates that the company is quick to convert its inventory into sales. Maximum Inventory Days shows that the company is slower or taking so many days to convert their inventory into sales.
Maximum Inventory Days always does not mean that the company is not doing well because every industry is different, some companies might have slow-moving inventory depending on the industry (like automobiles).
Inventory Days are also known as 'Days in Inventory', 'Inventory Days of Supply', 'Inventory Period', and 'Days Inventory Outstanding'.
The formula for calculating Inventory Day
Example: For the financial year, Indus Towers reported an Inventory Turnover Ratio of 56.05.
The value as per the formula [365 (Days) / Inventory Turnover Ratio] is calculated as (365 / 56.05) = 6.51