DAYS INVENTORY shows the average length of time items are in inventory, i.e., how many days a business could continue selling using only its existing inventory. The goal, in most cases, is to demonstrate efficiency through having a high turnover rate and therefore a low days' inventory. However, realize that this ratio can be unfavorable if either too high or too low. A company must balance the cost of carrying inventory with its unit and acquisition costs. The cost of carrying inventory can be 25% to 35%. These costs include warehousing, material handling, taxes, insurance, depreciation, interest and obsolescence. Formula: Inventory / (Net Revenue / 365).
CONVERSION COSTS is Direct Labor + Manufacturing Overhead.
INTEREST INCOME - NON-OPERATING is interest income generated from non-operating investment securities such as certificates of deposit or bonds for non-financial service companies.
Enter a term, then click the entry you would like to view.