Inventory turnover & Inventory turnover in days ratio calculation

During the year, ABCD Company had a cost of goods sold of $1,344. inventory at the end of year was $ 422. in this case, Inventory Turnover can be calculated as follows:

Inventory Turn Over = Cost of Goods Sold/ Inventory
                                   = 1344/422
                                   = 3.2 Times


ABCD sold off or turned over entire inventory 3.2 times. The higher the ratio is, the more efficiently we are managing inventory. Now Inventory turnover in days ratio calculation


Inventory Turn Over in days = 365* days/ Inventory Turn over
                                                = 365 days/3.2
                                                = 114 days


* the days can be assume 360 days also.