duration in Activity ratios
Number of days within Activity Ratios use 365 days as a standard practice for duration.
However, if the operating cycle is less than 365 days- would it be appropriate to substitue the new duration?
i.e. if the operating cycle is 180 days THEN
days of inventory on hand = 365/inventory turnover
WOULD BE CHANGED TO
days of inventory on hand = 180/inventory turnover
Is this correct. |