Free tool
Days inventory outstanding calculator
Enter average inventory and cost of goods sold to see how many days, on average, stock sits before it sells.
Your inventory and cost of goods
Days inventory outstanding
91.25 days
- Cost of goods sold per day
- $3,287.67
- Inventory turnover
- 4 turns
Average inventory divided by cost of goods sold, times the days in the period.
The formula
Days inventory outstanding = average inventory ÷ cost of goods sold × days in the period
Cost of goods sold per day = cost of goods sold ÷ days in the period
- Average inventory
- Stock value at cost averaged over the period.
- Cost of goods sold
- The cost of the stock that sold during the same period.
- Days in the period
- 365 for a year, 90 for a quarter, matched to the cost of goods sold figure.
Worked example
- Average inventory at cost is $300,000 and cost of goods sold over 365 days is $1,200,000.
- Cost of goods sold per day is $1,200,000 ÷ 365 = $3,287.67.
- Days inventory outstanding is $300,000 ÷ $1,200,000 × 365 = 91.25 days.
- The same stock turns 4 times a year, and 365 ÷ 4 gives the same 91.25 days.
When it applies
- Tracking how long cash sits in stock from one period to the next.
- Feeding the inventory leg of the cash conversion cycle.
When it breaks down
- With no cost of goods sold in the period, stock never clears and DIO has no value.
- A single business-wide figure blends items that sell in days with items that sit for a year.
Common mistakes
Mismatching the days
A quarter's cost of goods sold needs 90 or 91 days, not 365, or DIO comes out four times too long.
Using selling price
Inventory is at cost, so cost of goods sold belongs in the denominator, not revenue.
Reading DIO as shelf life
DIO is an average across all stock. Individual items can be far older or far newer.
Questions
What is days inventory outstanding?
The average number of days stock is held before it sells, measured at cost: average inventory ÷ cost of goods sold × days in the period.
Is DIO the same as days in inventory?
Yes. Days in inventory, days sales of inventory (DSI) and days inventory outstanding all describe the same calculation.
How does DIO relate to inventory turnover?
They are reciprocals. DIO = days in the period ÷ inventory turnover ratio, so 4 turns a year is 91.25 days.
Is a lower DIO better?
Lower DIO means less cash tied up in stock, but pushed too low it means running out. Read it alongside stockouts.
Why does the calculator refuse zero cost of goods sold?
DIO divides by cost of goods sold. With nothing sold, stock does not clear in any number of days, so there is no figure to show.
How does DIO connect to buying decisions?
DIO describes the past period. Skuvelo shows explainable forecast ranges per item and dates open purchase orders from supplier payment terms, so you can see what stock will cost and when.
Related
Published by Skuvelo. Results are estimates computed from the figures you enter, not a reading of your own sales or stock.
A calculator answers once. Skuvelo keeps answering.
This tool computes one number from what you type. Skuvelo computes it continuously, for every SKU, from your own sales and stock.