Days Inventory Outstanding (DIO) Calculator
Days Inventory Outstanding (DIO) Calculator
How long does stock sit before it sells? Lower DIO means less cash tied up in inventory.
Current stock on hand
Annual direct costs
For benchmark comparison
Your Days Inventory Outstanding
How This Calculator Works
Lower DIO is generally better but too low risks stockouts. Match DIO to your sales velocity and supply lead times.
This calculator is for educational purposes only and does not constitute financial advice. Consult a qualified accountant for guidance specific to your business.
What Is Days Inventory Outstanding (DIO)?
Days inventory outstanding (DIO) – sometimes called days sales of inventory or stock days – is the average number of days your stock sits before it is sold. The lower the number, the faster you are turning inventory into sales, and the less cash you have tied up on the shelf.
The DIO Formula
DIO = (Average Inventory / Cost of Goods Sold) × 365
For example, a retailer carrying £180,000 of average stock against £900,000 of annual cost of goods sold has a DIO of (180,000 / 900,000) × 365 = 73 days. On average, stock sits for about ten weeks before it sells.
What Is a Good DIO?
It varies enormously by sector. A fresh-food business might run a DIO in single digits; a furniture retailer or a manufacturer holding raw materials could sit at 90 days or more. The right benchmark is your own trend and your direct competitors – a rising DIO usually means stock is building up faster than it is selling, which ties up working capital and raises the risk of obsolescence.
How to Reduce Your DIO
- Sharpen demand forecasting so you order closer to what you actually sell.
- Clear slow-moving and obsolete lines rather than letting them tie up cash.
- Negotiate smaller, more frequent deliveries with key suppliers.
- Use just-in-time ordering where your supply chain is reliable enough to support it.
DIO and the Cash Conversion Cycle
DIO is one of the three components of the cash conversion cycle (CCC), alongside debtor days (DSO) and creditor days (DPO). The CCC formula is DIO + DSO − DPO, so cutting your DIO directly shortens the time between paying for stock and getting paid by customers.
Frequently Asked Questions
How do you calculate days inventory outstanding?
Divide your average inventory by your cost of goods sold, then multiply by 365. The calculator above does it instantly once you enter the two figures.
Is a lower DIO always better?
Usually, but not always. A very low DIO can mean you are at risk of stockouts and lost sales. The aim is to hold just enough stock to meet demand without tying up cash unnecessarily.
What is the difference between DIO and inventory turnover?
They measure the same thing in different units. Inventory turnover is how many times you sell through your stock in a year; DIO converts that into an average number of days (365 divided by inventory turnover).