Days Inventory Outstanding Calculator

Calculate how many days your inventory is held before being sold. Essential for managing cash flow and inventory efficiency.

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Quick Facts

Industry Average DIO
30-60 days
Varies by industry
Retail Average
~45 days
Typical for retail sector
Manufacturing
~60-90 days
Higher due to production cycles
Lower is Better
Faster turnover
Improves cash flow

Your Results

Calculated
Days Inventory Outstanding
0 days
Average days to sell inventory
Inventory Turnover Ratio
0x
Times inventory sold per year
Daily COGS
$0
Cost of goods sold per day

Key Takeaways

  • Days Inventory Outstanding (DIO) measures how long inventory sits before being sold
  • Lower DIO indicates efficient inventory management and better cash flow
  • The formula is: DIO = (Average Inventory / COGS) x 365
  • Compare your DIO to industry benchmarks to assess performance
  • DIO is part of the Cash Conversion Cycle (CCC) calculation

About the Days Inventory Outstanding Calculator

The Days Inventory Outstanding Calculator is a comprehensive online tool designed to help you calculate how many days inventory is held before being sold. Whether you're a business owner, financial analyst, or student, this free calculator provides accurate results instantly.

Understanding the Calculation

DIO = (Average Inventory / Cost of Goods Sold) x 365
DIO = Days Inventory Outstanding
Average Inventory = (Beginning + Ending Inventory) / 2
COGS = Annual Cost of Goods Sold
365 = Days in a year

How to Use This Calculator

  1. Enter your Average Inventory value - this is typically the average of beginning and ending inventory for the period
  2. Enter your annual Cost of Goods Sold (COGS) from your income statement
  3. Click the "Calculate" button to see your results
  4. Use the "Reset" button to clear all fields and start over

Why Days Inventory Outstanding Matters

Days Inventory Outstanding is a critical metric for several reasons:

  • Cash Flow Management: Lower DIO means faster conversion of inventory to cash
  • Working Capital: Understanding DIO helps optimize working capital requirements
  • Efficiency Indicator: Reveals how efficiently a company manages its inventory
  • Industry Comparison: Allows benchmarking against competitors and industry standards
  • Cash Conversion Cycle: DIO is a key component in calculating CCC

Interpreting Your Results

Low DIO (Below Industry Average)

A low DIO generally indicates efficient inventory management. The company is selling inventory quickly, which means less money tied up in stock and reduced risk of obsolescence. However, extremely low DIO might indicate understocking risks.

High DIO (Above Industry Average)

A high DIO suggests inventory is sitting longer before being sold. This could indicate overstocking, slow-moving products, or declining sales. High DIO ties up capital and increases carrying costs.

Industry Benchmarks

DIO varies significantly by industry:

  • Grocery/Perishables: 5-15 days
  • Retail (General): 30-60 days
  • Fashion/Apparel: 60-90 days
  • Manufacturing: 60-120 days
  • Heavy Equipment: 100-200+ days

Frequently Asked Questions

A "good" DIO depends on your industry. Generally, lower is better as it means faster inventory turnover. Compare your DIO to industry averages: retail typically aims for 30-60 days, while manufacturing may see 60-90 days as acceptable.

Average Inventory = (Beginning Inventory + Ending Inventory) / 2. For more accuracy, you can use the average of monthly inventory values if available.

They are inversely related. Inventory Turnover = 365 / DIO, or Inventory Turnover = COGS / Average Inventory. Higher turnover means lower DIO, and vice versa.

To reduce DIO: implement just-in-time inventory, improve demand forecasting, discontinue slow-moving products, offer promotions on aging inventory, and optimize reorder points and quantities.

Yes, this calculator is completely free to use with no hidden charges or registration requirements.

Yes! Click the "Copy Widget Code" button above to get the embed code for your website.

Additional Resources

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