📊 DIO Calculator
Calculate Days Inventory Outstanding (DIO)
Average inventory value during the period
Period for COGS calculation (typically 365 for annual, 90 for quarterly)
How to Use This Calculator
Enter Average Inventory
Input the average inventory value during the period - typically (Beginning Inventory + Ending Inventory) / 2.
Enter Cost of Goods Sold
Enter the cost of goods sold (COGS) for the same period - the direct costs of producing goods sold.
Enter Number of Days
Enter the number of days for the period (typically 365 for annual, 90 for quarterly, 30 for monthly).
Review DIO
See the days inventory outstanding (DIO) - the average number of days it takes to sell inventory. Lower DIO is generally better, indicating faster inventory turnover.
Formula
DIO = (Average Inventory / COGS) × Number of Days
Inventory Turnover = COGS / Average Inventory
Example Calculation:
If average inventory $50,000, COGS $500,000, days 365:
• DIO = ($50,000 / $500,000) × 365 = 36.5 days
• Inventory turnover = $500,000 / $50,000 = 10x
• This means it takes about 37 days on average to sell inventory
About DIO Calculator
A DIO (Days Inventory Outstanding) calculator helps you calculate the average number of days it takes to sell inventory. DIO is calculated as (Average Inventory / COGS) × Number of Days. Lower DIO is generally better, as it indicates faster inventory turnover and better inventory management. DIO is an important metric for assessing inventory efficiency, working capital management, and cash flow. It's a key component of the cash conversion cycle (CCC).
When to Use This Calculator
- Inventory Management: Assess inventory turnover efficiency
- Working Capital Management: Evaluate working capital efficiency
- Cash Flow Analysis: Analyze cash flow from inventory
- Financial Analysis: Assess inventory management
Understanding DIO
- Lower DIO: Faster inventory turnover (generally better)
- Higher DIO: Slower inventory turnover (may indicate issues)
- Industry Standards: DIO varies by industry
- Trend Analysis: Monitor DIO trends over time
Why Use Our Calculator?
- ✅ DIO Calculation: Calculate DIO accurately
- ✅ Inventory Management: Assess inventory turnover efficiency
- ✅ Working Capital: Evaluate working capital efficiency
- ✅ Cash Flow Analysis: Analyze cash flow from inventory
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is DIO (Days Inventory Outstanding)?
DIO (Days Inventory Outstanding) measures the average number of days it takes to sell inventory. It's calculated as (Average Inventory / COGS) × Number of Days. Lower DIO is generally better, as it indicates faster inventory turnover and better inventory management. DIO is an important metric for assessing inventory efficiency, working capital management, and cash flow. It's a key component of the cash conversion cycle (CCC).
What's a good DIO?
A lower DIO is generally better, as it indicates faster inventory turnover. However, the "good" DIO depends on the industry, product type, and business model. Generally, DIO under 30 days is excellent, 30-60 days is good, and over 60 days may need improvement. Compare to industry benchmarks and historical trends. DIO should align with your business model and inventory requirements.
How do I reduce DIO?
To reduce DIO: (1) Improve inventory management - optimize inventory levels, (2) Increase sales velocity - improve marketing and sales, (3) Reduce slow-moving inventory - identify and reduce obsolete inventory, (4) Improve forecasting - better demand forecasting, (5) Supplier management - improve supply chain efficiency, (6) Just-in-time inventory - reduce inventory holding. The goal is to sell inventory faster.
Why is DIO important?
DIO is important because it measures inventory turnover efficiency and cash flow. It helps: (1) Assess inventory management - how efficiently you turn inventory, (2) Analyze cash flow - understand cash flow from inventory, (3) Evaluate working capital - assess working capital efficiency, (4) Identify issues - detect inventory management problems early. Lower DIO improves cash flow, reduces working capital needs, and improves financial health. DIO is also a key component of the cash conversion cycle.