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Days Cost of Sales

The Days Cost of Sales projection method provides a quick and reliable way to forecast Inventory balances based on your expected Cost of Sales activity and the number of days of inventory you plan to keep on hand.

 

 

This method is available for Inventory accounts under the Current Assets section of your Balance Sheet.

It calculates future inventory levels by referencing Cost of Sales accounts within your Income Statement and applying a Days Cost of Sales metric to determine how much inventory should be held to support sales demand.

When to Use This Method

Use the Days Cost of Sales projection method when:

  • You want a fast, straightforward way to forecast inventory balances.

  • Your inventory levels are tied closely to sales volume and cost of goods sold.

  • You prefer to maintain a consistent days-on-hand inventory target rather than detailed SKU-level modeling.

How It Works

The Days Cost of Sales method works by solving for the inventory balance that will satisfy X number of days of your projected Cost of Sales.

In other words, it answers:

“How much inventory should we hold to meet X days of expected sales activity?”

Applying the Method

Step 1 – Open the Inventory Account

Go to your Balance Sheet → Current Assets → Inventory.

Double-click or right-click and select Edit.

Step 2 – Select the Projection Method

Choose Days Cost of Sales from the list of available projection methods.

Days Cost of Sales

Step 3 – Reference Cost of Sales Accounts

Select which Cost of Sales accounts from your Income Statement you want to reference.
These are the accounts that reflect the expected flow of goods out of inventory as sales occur.

Step 4 – Enter the Number of Days

Input the number of Days of Inventory on Hand you plan to maintain (e.g., 45 days).
PlanGuru will calculate your projected inventory balance based on your chosen days and Cost of Sales activity.

Historical Insights

The grid also displays historical days of cost of sales by month, calculated from prior-year data, along with an average.


This allows you to see past performance and choose realistic inventory day targets.

 

Enter Days

Results

The result is a dynamic, automatically calculated inventory balance that reflects:

  • Real-time updates from Cost of Sales forecasts.

  • Proportional changes in sales volume.

  • A rolling target based on the number of days selected.

This ensures your Balance Sheet inventory levels align with your Income Statement activity for accurate cash flow forecasting.

Inventory-result

Advanced Inventory Forecasting

While the Days Cost of Sales method is simple and effective, some users may need more granular control over inventory projections.

For advanced modeling, use the Assumptions & KPIs tab to create custom inventory formulas — such as inventory by SKU, product class, or purchase cycle.