Days Inventory Outstanding (DIO)
Corporate Credit Analysis glossary · Financial Statement Analysis & Cash Flow Dynamics
Definition
Inventory divided by average daily COGS; a measure of inventory turnover. Rising DIO can signal obsolescence risk or weakening demand.
Days Inventory Outstanding (DIO) in plain English
DIO measures how many days a company's products sit on the shelf before they sell. You take the value of unsold inventory and divide by the daily cost of the goods it sells, giving you "days' worth of stock just sitting there." A rising DIO is a red flag: it can mean demand is fading or the goods are going stale and might never sell at full price. Picture a bakery — bread that lingers for days instead of hours is a sign either nobody's buying or it's about to go moldy.
Also called: DIO
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