1. What Is Days On Hand?

Days On Hand (DOH) is a financial metric that measures how many days it would take for a company to sell its entire inventory based on current sales rates. It indicates inventory management efficiency and liquidity.

2. How Does The Calculator Work?

The calculator uses the Days On Hand formula:

Where:

• \( DOH \) — Days On Hand (days)
• \( \text{Average Inventory} \) — Average inventory value during the period (dollars)
• \( \text{COGS} \) — Cost of Goods Sold for the year (dollars/year)

Explanation: This formula calculates how long inventory remains in stock before being sold, providing insight into inventory turnover efficiency.

3. Importance Of DOH Calculation

Details: DOH is crucial for inventory management, cash flow analysis, and identifying potential overstocking or understocking issues. Lower DOH generally indicates better inventory turnover.

4. Using The Calculator

Tips: Enter average inventory in dollars and annual COGS in dollars/year. Both values must be positive numbers for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Days On Hand value?
A: Ideal DOH varies by industry, but generally 30-90 days is considered healthy. Lower values indicate faster inventory turnover.

Q2: How is average inventory calculated?
A: Average inventory = (Beginning Inventory + Ending Inventory) ÷ 2, typically calculated monthly or quarterly.

Q3: What if COGS is not annual?
A: If using quarterly COGS, multiply by 4; if monthly, multiply by 12 to annualize before calculation.

Q4: How does DOH differ from inventory turnover?
A: DOH shows days to sell inventory, while turnover shows how many times inventory is sold and replaced annually. DOH = 365 ÷ Inventory Turnover.

Q5: When is high DOH problematic?
A: High DOH may indicate slow-moving inventory, potential obsolescence, or overstocking, which ties up capital and increases storage costs.