 Hello, in this lecture we will define days, sales, and inventory. According to fundamental accounting principles Wild 22nd edition, the definition of days, sales, and inventory is estimate of number of days needed to convert inventory into receivables or cash equals ending inventory divided by cost of goods sold and then multiplied by 365, also called days stock on hand. So we're doing a calculation here that calculation is of course going to be an estimate. What we're trying to determine is a rough estimate of how many days it will take to convert the inventory to a sale, that sale being on account in terms of converting to a receivable or for cash. The numbers we will be using will be the ending inventory, the balance sheet accounts, and the related cost of goods sold, the related income statement account related to inventory, and the number of days in the year that being 365 in order to calculate day sales in inventory. Let's take a look at an example. Inventory here, we're going to assume we sell t-shirts and the question is how many days on average will it take to make that t-shirt convert to a sale to a customer in the form of sales on account or sales for cash. That's going to be the calculation of ending inventory, the balance sheet account divided by cost of goods sold, the income statement accounts, taking that number and then multiplying it times the number of days in the year, that being 365.