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AE121

Days of Raw Materials Inventory

Days of Raw Materials Inventory measures the number of days worth of inventory the company holds on its books that have a RM status.

Calculation

Days of Raw Materials Inventory
=
Raw Materials Inventory   × 365 days
Raw Material Purchases

where:

  • Raw Materials Inventory = Average Raw Materials Inventory (= average of beginning and ending inventories). Raw Materials inventory includes Unrestricted, Restricted and Blocked RM inventories.
  • Raw Material Purchases = Total annual RM purchases

Unit of measure: days (Calendar days)

Alternative names include: Inventory Days of Supply Raw Materials. See also: Raw Materials Inventory Turns.

Notes

Days of Raw Materials Inventory may be calculated using value or volume. Value-based is preferred as AE focuses on the efficient use of capital. Volume-based calculations may overstate the importance of inventories of low-value materials.

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Hierarchy

IDNameLevelx
AE12Days of Inventory2AE12
AE121Days of Raw Materials Inventory3AE121
AE1211Raw Material Inventory - Unrestricted4AE1211
AE1212Raw Material Inventory - Restricted4AE1212
AE1213Raw Material Inventory - Blocked4AE1213

Term(s)

IDNameClearx
INVInventoryINV
RMRaw MaterialRM
Days of Raw Materials Inventory Days Of Inventory 51210 3 {{{keywords}}} {{{description}}}