Find how many days, on average, inventory sits before it sells — a core efficiency and cash-flow metric for any business that holds stock.
DIO = (average inventory ÷ COGS) × days in period. Lower means inventory sells quickly and less cash is tied up in stock; too low risks stockouts and lost sales. Ideal levels vary hugely by industry (groceries turn fast, jewelry slow). General information only.
Days inventory outstanding measures how many days, on average, products stay in inventory before selling. It's the flip side of inventory turnover: fewer days means faster-moving stock and less cash frozen in the warehouse. But too few days can mean you're running lean enough to risk stockouts.
DIO = (average inventory ÷ COGS) × days in period
They're two views of the same thing — DIO in days, turnover in times-per-year. DIO ≈ 365 ÷ turns. Use whichever is more intuitive for your team.
Entirely industry-dependent. Compare to your own trend and close competitors, not a universal number. Falling DIO with steady sales is generally a good sign.
Related: inventory turnover calculator · days sales outstanding calculator · cash conversion cycle calculator · all free calculators.
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