Days Inventory Outstanding (DIO) Calculator
From average inventory and cost of goods sold, compute how many days inventory sits before being sold (DIO).
Input Data
Results
At a glance:DIO = average inventory / COGS x period days (365 for a year). It shows the average days inventory sits before sale — lower = faster turnover, less tied capital; higher = slow stock, possible overstock. Right level varies by industry (fresh food very low, furniture/cars higher). WARNING: DIO doesn't reveal stockouts; compare within industry and watch seasonality. Education, not advice.
Formula
DIO = average inventory / COGS × period days.
Inventory turnover = COGS / average inventory (turns per period).
$$DIO = \\dfrac{\\text{Average inventory}}{\\text{COGS}} \\times \\text{Days in period}$$How to Use
- Enter the average inventory.
- Enter the COGS for the same period.
- Enter the period days (365 for a year) for DIO.
FAQ
What is DIO and how is it computed?
DIO (Days Inventory Outstanding) = average inventory / COGS x period days (365 for a year). Example: average inventory 1,000,000, annual COGS 6,000,000, 365 days → (1,000,000/6,000,000)x365 ≈ 60.8 days. It tells how long inventory sits on average before sale.
How is DIO linked to inventory turnover?
They are inverses: turnover = COGS / average inventory (times per year); DIO = 365 / turnover (days per turn). High turnover = low DIO (fast); low turnover = high DIO (slow). They express the same efficiency from different angles.
What is a good DIO, and does a lower number mean better?
There is no universal good level — it depends on industry. Fresh food must be very low; furniture, cars, heavy equipment are naturally higher. Lower is not always better: too low risks stockouts and lost sales; too high risks obsolescence and tied capital. Judge against peers and your own trend.
What is the relationship between DIO and inventory turnover?
They are two faces of the same coin: turnover = COGS / average inventory (how many times inventory sells per year); DIO = period days / turnover (average days to sell one round). So DIO = (average inventory / COGS) x days. High turnover → low DIO → fast; low turnover → high DIO → slow. Use whichever angle you prefer, but be consistent on the period (annual vs quarterly).
What are the Hong Kong SME pain points, and caveats?
HK SMEs (retail, F&B, trading) often tie large working capital in inventory; rent is high, so slow stock raises cost and risk. Pain points: overstock from misjudged demand, dead stock from seasonal/off-style goods, cash-flow strain during long inventory cycles. Caveats: (1) DIO alone doesn't show stockouts — pair with service level; (2) compare within industry and same period (seasonality distorts); (3) use average inventory, not just closing; (4) FIFO vs weighted-average COGS affects the number. The HKTDC and HKPC offer inventory and working-capital guidance. Education, not advice.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.