The Average Days Inventory Formula is a widely used metric that measures the average number of days it takes a company to turn its inventory into sales. By understanding this figure, businesses can get an idea of how quickly their goods are moving off shelves or being sold online and identify any bottlenecks in their supply chain. The formula for calculating Average Days Inventory is fairly simple: take the number of days in a period (e.g. 365 for a year) and divide it by the cost of goods sold divided by the average inventory level. By doing this calculation, a business can gain insight into its efficiency and make more informed decisions about how to optimize its supply chain.