Days inventory outstanding

How long stock sits before it is sold, measured as inventory divided by cost of goods sold, multiplied by 365. Using revenue rather than cost in the denominator understates the figure and is a common mistake.

A distributor carrying ₹780 crore of inventory against ₹3,900 crore of cost of goods sold holds about 73 days.

Rising inventory days is the earliest visible sign of a demand problem, because production plans are set months before sales disappoint. It is also the setup for a write-down, since stock that has not moved will eventually be marked below cost.

Split the figure where the notes allow. Raw materials building up is a purchasing decision. Finished goods building up is a demand signal.