Days stock sits before selling. The Days Inventory Outstanding Calculator takes average inventory (at cost), cost of goods sold for the period, days in the period and returns days inventory outstanding plus inventory turnover. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Days Inventory Outstanding Calculator works
The average number of days a unit of stock sits before it is sold. Rising DIO means cash is being tied up in stock that is moving more slowly.
Worked example
With the example values (average inventory (at cost) of $150,000, cost of goods sold for the period of $900,000, days in the period of 365 days), the days inventory outstanding is 61 days; inventory turnover 6.00x. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is days inventory outstanding calculated?
DIO = average inventory ÷ cost of goods sold × days in period.
Which figures do I need?
Average inventory (at cost), cost of goods sold for the period, days in the period. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
