daysonhand

Days on hand is a financial metric used to measure the average number of days it takes for a company to sell its inventory. It is calculated by dividing the average inventory by the cost of goods sold and then multiplying by 365. A lower days on hand figure generally indicates that a company is managing its inventory efficiently and that its products are selling quickly. Conversely, a high days on hand figure may suggest that a company has too much inventory or that its products are not selling well. This can tie up valuable capital and lead to increased storage costs and potential obsolescence.

The calculation provides insights into the liquidity of a company's assets. A shorter period suggests that inventory is being converted into cash more rapidly, which is typically a positive sign for financial health and operational efficiency. Investors and financial analysts often use this metric to compare a company's inventory management practices against industry averages or its own historical performance. Significant changes in days on hand can signal underlying issues with sales, demand, or procurement strategies that require further investigation.