Days Inventory Outstanding (DIO)

Find out how many days on average your inventory sits before being sold, helping you optimize stock levels and reduce carrying costs.

Average Inventory ($)

Beginning inventory + ending inventory ÷ 2

Cost of Goods Sold (COGS) ($)

Total cost of goods sold for the period

Period (Days)

Days Inventory Outstanding Results

Days Inventory Outstanding

Inventory Turnover Ratio

Daily COGS

Interpretation

Industry Benchmarks

Understanding Days Inventory Outstanding

Formula

DIO = (Average Inventory ÷ COGS) × Period Days

Or

DIO = Average Inventory ÷ (COGS ÷ Period Days)

Key Components

Average Inventory: (Beginning + Ending Inventory) ÷ 2
COGS: Cost of goods sold for the period
Period Days: Number of days in the analysis period
Inventory Turnover: COGS ÷ Average Inventory

What DIO Tells You

• How many days it takes to sell inventory
• Efficiency of inventory management
• Cash flow implications
• Working capital requirements
• Comparison with industry peers

Interpretation Guidelines

• Lower DIO: Faster inventory turnover, better cash flow
• Higher DIO: Slower turnover, potential obsolescence risk
• Seasonal patterns: Consider business cycles
• Industry context: Compare with sector averages
• Trend analysis: Track changes over time

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