Days Inventory Outstanding

D

deepak

Member
I’ve been trying to better understand inventory management metrics and came across Days Inventory Outstanding (DIO). From what I gather, it measures the average number of days a company holds inventory before selling it. Can someone explain how it’s calculated and why it’s important for businesses? Also, are there industry benchmarks to compare DIO effectively? Any examples or tips would be really helpful!
 
DIO shows how many days inventory sits before selling. Formula: (Avg Inventory ÷ COGS) × 365. Low DIO = faster sales, high DIO = slower turnover. Benchmarks vary (retail ~30–60 days, auto 60–90, luxury 100+). Always compare with your industry.
 
Days Inventory Outstanding (DIO) indicates the average number of days required to turn over inventory of a company- calculated by taking (Average Inventory ÷ COGS) × 365 the less the number, the higher the turnover, and the standard is industry specific.
 
Days Inventory Outstanding (DIO) indicates the average length of time that a business holds inventory before it sells the inventory. The calculation is (Average Inventory/ Cost of Goods Sold) x 365. Smaller DIO is more likely to generate quicker sales and improved cash flow whereas a bigger DIO may be a sign of overstocking. Industry benchmarks differ- a grocery store will have low DIO, furniture/luxury goods will have high DIO. The use of Tracking DIO can help businesses to control inventory effectively and lower their holding costs.
 
Days Inventory Outstanding (DIO) measures the average number of days a company takes to sell its inventory. It indicates inventory efficiency, calculated as: (Average Inventory ÷ Cost of Goods Sold) × 365 days. Lower DIO means faster inventory turnover.
 
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