Average Days Of Inventory (or ADI) is a metric used to measure a company’s efficiency in managing its inventory. It helps businesses monitor their stock levels and identify potential issues with production or layout. ADI is calculated by taking the number of days that goods are held in inventory, divided by the average daily cost of goods sold for that period. This gives you a snapshot of how long it takes for goods in inventory to be sold and replaced. By tracking this figure, companies can ensure they have enough inventory on hand to meet customer demand, but not so much that it ties up cash unnecessarily.