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Days Inventory Outstanding Calculator

See how long inventory is held before sale.

How it is calculated

The tool calculates DIO = inventory ÷ COGS × period and turnover = COGS ÷ inventory. Inventory is the stock value (the average over the period is the better figure), COGS is cost of goods sold for the same period, and period is the number of days that COGS covers. If the period is empty or not above zero, 365 is used. Inventory and COGS must both be above zero or no result is shown. Turnover is not annualised: with a 90-day period the figure is turns per quarter, not per year. Use cost values, not selling prices, for both inventory and COGS, and keep both in the same currency.

Worked example

A shop holds 50,000 of inventory at cost and had 300,000 of cost of goods sold over a 365-day year. DIO = 50,000 ÷ 300,000 × 365 = 60.83 days. Turnover = 300,000 ÷ 50,000 = 6.00×. On average, stock is sold and replaced six times a year, with each item sitting about two months before it sells.

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Common mistakes

  • Using sales revenue instead of cost of goods sold, which makes DIO look shorter and turnover higher than they are.
  • Putting a quarter of COGS with the default 365-day period (or a full year of COGS with 90 days); the COGS and period must cover the same span.
  • Using the year-end inventory when stock is seasonal, rather than an average of opening and closing values.
  • Reading turnover as an annual figure when the period is not 365; a 90-day period gives turns per quarter.
  • Valuing inventory at retail price while COGS is at cost, so the two numbers are on different bases.

Sources

About this calculator

Days inventory outstanding (DIO) measures how many days, on average, a company holds inventory before selling it: DIO = (Average Inventory ÷ Cost of Goods Sold) × 365. Its inverse relationship, inventory turnover (COGS ÷ Average Inventory), shows how many times inventory is sold and replaced over the period — the two describe the same efficiency from opposite angles.

Financial analysts, supply chain managers, and business owners use DIO to gauge inventory efficiency and how much working capital is tied up in stock: a rising DIO can signal slowing sales or overstocking, while a very low DIO in some industries can mean stockout risk. It's also a key input in the cash conversion cycle, alongside days sales outstanding and days payable outstanding.

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Comments (1)

  • Editorial team

    DIO shows how long cash stays tied up in stock, but only for the stock side. Pair it with receivable days and payable days to get the cash conversion cycle, which is DIO plus receivable days minus payable days. This tool does not compute that cycle, so you would add the other two figures yourself. Also compare only with businesses of a similar type. Which ratio do you pair it with when you review a business?

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