Days Inventory Outstanding Calculator
Calculate DIO to measure how efficiently a company turns inventory into sales and analyze inventory management
Calculate Days Inventory Outstanding
Beginning inventory value for the period
Final inventory value for the period
Total cost of goods sold during the period
Usually 365 for annual calculation
Days Inventory Outstanding Results
Enter your inventory and cost data to see the DIO calculation
Example Calculation
Company Alpha Example
Starting Inventory (2020): $500,000
Ending Inventory (2021): $750,000
Cost of Goods Sold: $6,500,000
Accounting Period: 365 days
Calculation Steps
Step 1: Average Inventory = ($500,000 + $750,000) ÷ 2 = $625,000
Step 2: DIO = ($625,000 ÷ $6,500,000) × 365 = 35.1 days
Result: Company Alpha takes 35.1 days to turn inventory into sales
Industry Benchmarks
Retail
30-60 days
Fast-moving consumer goods
Manufacturing
60-90 days
Complex production cycles
Technology
20-40 days
Rapid product cycles
Automotive
15-30 days
Just-in-time production
DIO Optimization Tips
Lower DIO indicates efficient inventory management
Compare with industry benchmarks for context
Too low DIO may indicate stockouts risk
High DIO ties up working capital unnecessarily
Understanding Days Inventory Outstanding
What is Days Inventory Outstanding?
Days Inventory Outstanding (DIO) measures how many days it takes for a company to turn its inventory into sales. It's a key metric for evaluating inventory management efficiency and is part of the cash conversion cycle.
Why is DIO Important?
- •Measures inventory management efficiency
- •Indicates cash flow tied up in inventory
- •Helps optimize working capital management
- •Identifies risk of obsolescence or stockouts
DIO Formula Explanation
DIO = (Average Inventory ÷ COGS) × Days in Period
- DIO: Days Inventory Outstanding
- Average Inventory: (Starting + Ending Inventory) ÷ 2
- COGS: Cost of Goods Sold for the period
- Days in Period: Usually 365 for annual calculations
Note: DIO should be analyzed alongside DSO and DPO for comprehensive cash cycle analysis
Benefits of Lower DIO:
- ✓Better cash flow management
- ✓Reduced storage and holding costs
- ✓Lower risk of inventory obsolescence
- ✓More efficient operations
Risks of High DIO:
- ⚠️Excessive working capital tied up
- ⚠️Higher inventory holding costs
- ⚠️Risk of product expiration or obsolescence
- ⚠️Reduced overall profitability