The Inventory Days Ratio (IDR) is a tool used to measure how efficiently businesses manage their inventories. It helps quantify the amount of time that inventory sits on shelves or in warehouses, indicating how long it takes a company to turn its stock into profits. To calculate the IDR, divide the number of days of inventory by the number of days sales were outstanding. The resulting ratio provides a snapshot of a company’s inventory management efficiency and reveals opportunities for improvement. With an effective inventory strategy, businesses can quickly identify potential issues and be proactive about staying competitive. By keeping track of the Inventory Days Ratio, you can ensure your business remains up-to-date with its inventory needs and is maximizing its profits.