Result
DIO
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
DIO = inventory ÷ cost of goods sold for the period × number of days in the period. It shows how many days on average stock sits from arrival to sale.
A high DIO means a lot of cash is tied up in inventory that could otherwise be put to work, and it raises the risk of obsolescence or spoilage. Too low a DIO, on the other hand, raises the risk of stockouts during demand peaks. The right level depends on the industry: perishables are kept to a minimum, while seasonal or hard-to-source goods warrant a larger buffer.
DIO is one of three components of the Cash Conversion Cycle, alongside DSO (receivables) and DPO (payables). It's often the largest and most controllable part of CCC — trimming how long inventory sits usually has the biggest effect on freeing up cash.