Days Inventory Outstanding (DIO) Calculator

Days inventory outstanding, or DIO, measures the average number of days your stock sits on hand before it is sold. This calculator works it out from your inventory balance, your cost of goods sold (COGS) for the period, and the number of days in that period. It divides inventory by COGS, then multiplies by the days in the period to give a clear figure in days. DIO, sometimes called days sales of inventory, is a key working capital measure used by retailers, wholesalers, manufacturers and their accountants. A lower DIO means stock moves quickly and ties up less cash, while a higher DIO can signal slow moving lines, overstocking, or weak demand. Holding too little stock, on the other hand, risks stockouts and lost sales, so the goal is a balance that suits your industry and supply lead times. New Zealand businesses use DIO alongside days sales outstanding and days payable outstanding to build the cash conversion cycle, which shows how long cash is locked up in day to day operations. For an accurate result, match the period to the COGS figure you enter and consider using an average inventory balance when stock levels swing through the year, for example around seasonal peaks. Use 365 days for a full year, about 90 for a quarter, or 30 for a month, keeping COGS aligned to the same window. Compare your DIO with similar businesses and with your own history, since the trend often matters more than a single reading. A rising DIO with flat sales is worth investigating, as it can point to ageing or obsolete stock that may need clearing or writing down.

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Inventory ($)

Cost of goods sold ($)

Days in period

73.0 days

Days inventory outstanding

DIO = (inventory / COGS) x days in period. Estimate only, not financial or tax advice.

How it works

DIO divides inventory by cost of goods sold to find the share of annual cost held as stock. Multiplying by the days in the period converts that share into a number of days. A lower result means stock sells through faster.

Worked example

With inventory of $120,000, COGS of $600,000 and 365 days, the ratio is 0.2. Multiplied by 365 days, DIO is 73.0 days.

Related calculators

Inventory Turnover Calculator: stock turns per year.
Days Payable Outstanding Calculator: supplier payment days.
Cash Conversion Cycle Calculator: full working capital cycle.

Frequently asked questions

What does a high DIO mean?

A high DIO means stock is sitting longer before it sells, which ties up cash and raises the risk of obsolescence. It can point to overstocking or weak demand. Lower is usually better, but you still need enough stock to avoid running out.

Should I use average inventory?

Using average inventory, the opening plus closing balance divided by two, smooths out seasonal swings. A single point in time balance can distort the result if stock was unusually high or low that day. For a year, an average often gives a fairer figure.

How does DIO relate to inventory turnover?

Inventory turnover counts how many times stock cycles in a period, while DIO converts that into a number of days. They are two views of the same thing. DIO is roughly the days in the period divided by turnover.