Read the formula and its variables
n is the day count of the same period as the COGS flow.
| Input | Meaning |
|---|---|
| n | Days in the flow period |
| Average inventory | Matching inventory base |
| COGS | Positive period cost flow |
Inspect a stated example
At 365 days, inventory 40 and COGS 300 give 48.6667 days.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
A ratio estimate is not an exact holding-time observation for each item. Different period lengths require a matching n.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.