What is days sales of inventory?
Days sales of inventory answers a simple question: at your current sales pace, how many days would it take to sell everything on your shelves? You find it by dividing average inventory by cost of goods sold (COGS), then multiplying by the days in the period. A low number points to fast-moving stock; a high number usually means goods are sitting too long.
The metric exists to turn raw stock levels into a plain-language timeframe. A dollar figure on a balance sheet does not tell you whether inventory is healthy, but a day count does. It also goes by days inventory outstanding or days in inventory.
Controllers and operators run DSI as a routine health check. It surfaces slow-moving stock and cash tied up on shelves before that pressure reaches cash flow. The stakes are real: inventory distortion from out-of-stocks and overstocks reached $1.7 trillion in inventory distortion globally in 2026, equal to 6.2% of global retail sales, per IHL Group.
Key characteristics
- Formula: DSI = (average inventory / cost of goods sold) x number of days in the period, usually 365 for a year or about 91 for a quarter.
- Direction of reading: a lower DSI signals faster turnover; a higher DSI can signal overstocking or slowing demand.
- Inverse of turnover: DSI and the inventory turnover ratio describe the same efficiency from opposite angles.
- Industry-relative: a healthy DSI depends on your sector, so benchmark against similar businesses. The Census Bureau inventories-to-sales ratio works as a rough months-of-supply proxy, at 1.30 for U.S. total business at the end of July 2026.
- What it drives: teams use DSI to time reordering and keep working capital free, often paired with a reorder point formula so restocking matches real demand.
Example
Picture a craft cold-brew coffee roaster closing its books for the year. It holds $200,000 in average inventory and reports $1,000,000 in COGS.
Run the formula: $200,000 / $1,000,000 x 365 = 73 days. On average, the roaster takes 73 days to sell through its stock.
How healthy is that? Warehouse and distribution operators averaged 6.3 inventory turns in 2025, down from 6.5 in 2024 and 8.2 in 2023, per the 2025 warehouse operations survey from Supply Chain Management Review. That comes to roughly 58 days of inventory, so a 73-day roaster sits a little above that group.
Tighter inventory management is what pulls DSI toward a healthy range. Fishbowl users experience a 22% decrease in stockouts (Fishbowl customer data, 2025), which keeps sales flowing without padding the shelves. The same discipline shows up in everyday inventory optimization techniques like cycle counts, demand forecasting, and clearing dead stock.
Related terms
- inventory turnover ratio: how many times you sell and replace stock in a period.
- reorder point formula: the stock level that triggers your next order.
- inventory control: the practices that keep counts accurate and stock in balance.
- inventory management terms: a glossary of the vocabulary behind these metrics.
- full DSI calculation guide: a step-by-step walkthrough of the math.
FAQ
What is a good days sales of inventory number? There is no universal target; a good DSI is one at or near the average for your industry, low enough to free up cash but high enough to avoid stockouts.
Is a lower DSI always better? No. A very low DSI can mean you are understocking and risking lost sales, so read it alongside stockouts, backorders, and delivery times.
What is the difference between DSI and inventory turnover? They measure the same efficiency in different units: DSI reports the average days to sell inventory, while turnover reports how many times you sell and replace it in a period.