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Days Inventory Outstanding (DIO)

Calculate days inventory outstanding.

Beginning inventory + ending inventory ÷ 2

Total cost of goods sold for the period

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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