Days of Inventory on Hand (DOH) Calculator
This calculator helps finance professionals determine the Days of Inventory on Hand (DOH), a crucial metric for managing working capital efficiently. Knowing your DOH can help in maintaining optimal inventory levels and minimizing carrying costs.
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Data Source and Methodology
All calculations are based on the standard formula for Days of Inventory on Hand (DOH) using accounting principles. For more details, refer to authoritative financial literature.
The Formula Explained
\( \text{DOH} = \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \times 365 \)
Glossary of Terms
- Cost of Goods Sold (COGS): The direct costs attributable to the production of goods sold by a company.
- Average Inventory: The average amount of inventory a company holds over a certain period.
- DOH: Days of Inventory on Hand, a measure of how many days a company's current inventory will last.
Frequently Asked Questions (FAQ)
What is Days of Inventory on Hand (DOH)?
DOH is a financial metric that shows how many days a company takes to sell its entire inventory during a specific period.
How is DOH used?
DOH helps businesses understand their inventory efficiency and optimize their stock levels to reduce carrying costs.
What is a good DOH value?
A lower DOH indicates efficient inventory management. However, the ideal DOH varies by industry.
How can I improve my DOH?
Improving DOH can involve better demand forecasting, improved inventory turnover, and reducing overstocking.
How are COGS and inventory related?
COGS directly affects the DOH calculation as it is used to determine how quickly inventory is sold.