Average period of inventory/ Inventory days

magdamagda Feels At HomeRegistered Posts: 31
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

Comments

  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    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
    Sandy
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    www.sandyhood.com
  • magdamagda Feels At Home Registered Posts: 31
    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
  • ingainga Just Joined Registered Posts: 3
    Average days of inventory= ((opening inventory+closing inventory)/2)/cost of sales * 365
  • magdamagda Feels At Home Registered Posts: 31
    Thank you SandyHood and Inga for your help. I have done the task as you suggested and it was correct :-)
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