Average period of inventory/ Inventory days

magda

Hello
I have a task to do and I need to calculate the Average period (days)of inventory and Inventory days (based on the closing inventory). For me those are the same calculations.
Inventory days is = closing inventory/cost of sales x 365
So how to calculate the average period?
Any help please?
Magda

SandyHood

The average inventory period is the same.

Have you been asked for both these wordings of the same question in a single task?

There are some text books e.g Frank Wood which use average inventory value rather than closing inventory. Those questions expect you to add opening and closing inventories and divide by 2, and then divide by cost of sales (if FG stock) and multiply by the number of days in the year

magda

SandyHood wrote: »

The average inventory period is the same.

Have you been asked for both these wordings of the same question in a single task?

There are some text books e.g Frank Wood which use average inventory value rather than closing inventory. Those questions expect you to add opening and closing inventories and divide by 2, and then divide by cost of sales (if FG stock) and multiply by the number of days in the year

Yes I need to do both calculations in one task. That is why I am a bit confused as for me those are the same. But I was thinking about adding the whole inventory.Thank you

inga

Average days of inventory= ((opening inventory+closing inventory)/2)/cost of sales * 365

magda

Thank you SandyHood and Inga for your help. I have done the task as you suggested and it was correct :-)