To calculate the Age of Inventory, divide the average inventory by the cost of goods sold (COGS), then multiply the result by the number of days in the period. This gives the average number of days the inventory is held before being sold.
Welcome to the Age of Inventory Calculator! Have you ever wondered how long, on average, your inventory sits before it’s sold? This calculator helps you determine the age of your inventory based on key financial metrics.
Formula:
| Variable | Meaning |
|---|---|
| Age of Inventory | The average time inventory is held (in days) |
| Average Inventory | The average inventory held during the period |
| COGS | Cost of Goods Sold |
| Days in Period | The number of days in the period measured |
Solved Calculations :
Example 1:
Given Values:
- Average Inventory = $50,000
- COGS = $200,000
- Days in Period = 365
| Calculation | Instructions |
|---|---|
| Age of Inventory = (50,000 / 200,000) × 365 | Divide Average Inventory by COGS, then multiply by Days in Period. |
| Age of Inventory = 0.25 × 365 | Perform the multiplication. |
| Age of Inventory = 91.25 | The result gives the Age of Inventory in days. |
Answer: Age of Inventory = 91.25 days
Example 2:
Given Values:
- Average Inventory = $30,000
- COGS = $150,000
- Days in Period = 365
| Calculation | Instructions |
|---|---|
| Age of Inventory = (30,000 / 150,000) × 365 | Divide Average Inventory by COGS, then multiply by Days in Period. |
| Age of Inventory = 0.2 × 365 | Perform the multiplication. |
| Age of Inventory = 73 | The result gives the Age of Inventory in days. |
Answer: Age of Inventory = 73 days
What is Age of Inventory Calculator ?
The Age of Inventory Calculator helps businesses determine how long their stock has been sitting in the inventory, which is crucial for effective inventory management.
To calculate the age of inventory, you divide the average inventory by the cost of goods sold (COGS), then multiply by 365 (days in a year). This gives you the average age of inventory in days. It helps businesses assess how long their inventory remains unsold, providing insights into demand, stock turnover, and storage costs.
You can easily track inventory aging in Excel by using formulas. For example, subtract the purchase date from the current date to get the number of days in stock.
Excel functions like DATEDIF and conditional formatting can be used to highlight aged inventory for quicker action. The inventory aging report provides a breakdown of how long each item has been in stock, allowing businesses to focus on managing older inventory and avoid obsolescence.
A good age of inventory depends on the industry but generally indicates the ability to sell stock efficiently. Keeping an optimal inventory age helps reduce holding costs and improve cash flow..
Final Words:
The Age of Inventory Calculator is a vital tool for tracking how long stock remains unsold in your inventory. This metric, commonly calculated in days, helps identify slow-moving stock, manage storage costs, and optimize cash flow.
