Days inventory outstanding (DIO)
Principles of Finance glossary · Financial Statements, Markets & Working Capital
Definition
Inventory divided by daily cost of goods sold; the average days inventory is held.
Days inventory outstanding (DIO) in plain English
Days inventory outstanding measures how long a company's products sit on the shelf before they sell — think of it as the average age of the stuff in the warehouse. You take the value of inventory and divide by how much product the company sells per day (measured at cost), which tells you roughly how many days of stock is just sitting there. A store with a DIO of 30 turns over its shelves about once a month; a lower number usually means goods sell fast and less cash is tied up sitting idle. It's like checking how long groceries linger in your fridge before you eat them — fresher turnover is generally healthier.
Also called: DIO
Learn these first
Practice Days inventory outstanding (DIO)
Related Principles of Finance terms
Principles of Finance practice questions · Principles of Finance flashcards · Principles of Finance study guide