Which metric indicates the average number of days it takes for a company to sell inventory?

The metric that indicates the average number of days it takes for a company to sell inventory is Days Inventory Held (DIH). This metric is crucial for analyzing a company's efficiency in managing its inventory. DIH provides insight into how quickly the business is able to turn its inventory into sales, reflecting the effectiveness of inventory management strategies.

A lower DIH indicates that a company is selling its inventory quickly, which can lead to improved cash flow and reduced holding costs. Conversely, a higher DIH may suggest overstocking or slow-moving products, which could tie up capital and increase storage costs.

While other metrics like Days Payable Outstanding (DPO) relate to accounts payable efficiency, Days Inventory Held specifically targets inventory and its turnover rate. The Cash Conversion Cycle (CCC) combines several metrics, including DIH, DPO, and Days Sales Outstanding (DSO), to measure how efficiently a company converts its inventory and receivables into cash, but it does not directly measure the time taken to sell inventory alone. Net Working Capital (NWC) assesses financial health regarding short-term assets and liabilities, but it does not focus specifically on inventory turnover. Therefore, DIH is the direct measure pertaining to the average number of days inventory is held before it is