Days Inventory Outstanding (DIO)

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What is Days Inventory Outstanding (DIO)?

Days Inventory Outstanding (DIO) is a financial performance ratio, which indicates how long it takes a company to turn its inventory into sales.

Although the average DIO varies from one industry and region to another, it can be said that the lower the DIO, the more efficient a company is.

Calculation of Days Inventory Outstanding. Formula

The DIO ratio is calculated as follows:

DIO = (Inventories / Cost of Goods Sold in Accounting Period) x Days in Accounting Period

In this formula, the days in accounting period are typically 90 days for quarterly statements or 365 days for yearly statements.

DIO forms one part of the Cash Conversion Cycle, which represents the length of time that it takes a company to convert resource inputs into cash flows.

Days Inventory Outstanding (DIO) is also known as Days Sales of Inventory (DSI), Days Inventory Held (DIH), Days in Inventory (DII) and Days Inventory on Hand (DOH).

Forum Forum about Days Inventory Outstanding. What is the Meaning of a Particular Value of Days Inventory Outstanding (DIO)? I would like to know: if my DIO is 40.5 then what can be interpreted from this? Is this good, bad, poor or do I need some contigency plan?... 6   4 comments 🔥 Optimal Inventory Turnover Ratio What should be the ideal inventory turnover ratio in manufacturing industry and in a service industry? How can we achieve such an ideal inventory turnover ratio?... 5   1 comments Start a new topic about Days Inventory Outstanding Sign up for free

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