Days Inventory Outstanding (DIO)
Short answer
DIO is the average number of days inventory sits on your shelves before being sold.
Formula
DIO = (Inventory / COGS) × 365
Take inventory on hand, divide by annual cost of goods sold, multiply by 365.
Why it matters
Inventory is dead cash. High DIO means you're carrying product that's not turning. It also creates write-down risk if anything goes stale, out-of-fashion, or obsolete.
Benchmarks
People also ask
Common questions about Days Inventory Outstanding (DIO)
What is Days Inventory Outstanding (DIO)?+
DIO is the average number of days inventory sits on your shelves before being sold.
How is Days Inventory Outstanding (DIO) calculated?+
Take inventory on hand, divide by annual cost of goods sold, multiply by 365.
What is a good Days Inventory Outstanding (DIO)?+
A healthy days inventory outstanding (dio) is typically around < 30 days — fast turn (dtc, food). Specific targets vary by industry and stage; check our benchmarks above for your sector.
Why does Days Inventory Outstanding (DIO) matter?+
Inventory is dead cash. High DIO means you're carrying product that's not turning.
See your business's days inventory outstanding (dio).
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