Example of Days Sales of Inventory
Example 1:
XYZ Ltd. wants to calculate its DSI for the previous year. The store’s average inventory for the period was ₹50,000, and the cost of goods sold was ₹1,00,000.
DSI = 50,000 × 1,00,000 × 365 = 182.5
This indicates that it took XYZ Ltd. takes 182.5 days to turn its stock into sales. The DSI is high here because the products are high-cost and customers may not buy them frequently.
Example 2:
Sasta Mart would want the last 12 months’ worth of its DSI calculated. During that time, the cost of products sold was ₹1,50,000, while the average inventory was ₹30,000.
DSI = [Tex]\frac{30,000}{1,50,000}\times{36}=73[/Tex]
This suggests that it took New Mart 73 days to convert its inventory into sales.